A 30% increase in Sales and 19% increase in EPS in comparison with same quarter of the previous year for TCS, was not sufficient enough to get it a better ranking on its EPS growth. Ranking slipped from 86 to 76, taking the stock off the top performers list. The stock has made a 12% increase in price today, being the top most gainer in our BTT Index stocks. Why & what does this indicate? Market was expecting a very poor result and had gone short heavily on the stock, when the company announced a marginally better result than expectations and also gave a pretty good guidance, shorts had to be covered in panic, hence the bull run on the stock which has registered a 488% gain on volume today, against its average of 18 lakh shares per day.
The stock fell short of breaking its resistance at 1207 by 2 points and the stock was in sideways range on both the weekly and daily charts for quite some time now. Such great rallies do occur in non-trend areas, but they don't last long. Funds have also been largely on the sell side in the stock. For the month of Jan and Feb, funds have sold 76 lakh shares, while they bought 24 lakh shares, a clear indication that the funds have began to shy away from the stock.
Though the stock performed better than the IT bell whether INFY in sales, its profit margins show a decline when compared to INFY. But, again INFY has not gained because of its core operations, the gains came from treasury operations. When a company derives its profits from non-core segment, it puts a negative thought on the investors mind. Sustainability is a big question mark when such things happen and the stock got rewarded well for its side stepping attitude. Comparatively TCS is a better stock to INFY, but, not the superior one for the moment.
Like the other sectors, where mid caps have become stronger, even in the Tech space, mid caps have began to out shine the front line stocks. MIDTREE was an example of superior performance and the stock got priced aptly for the richness it showed in performance. Surely TCS or INFY for that matter, are not growth stocks which long term investors would look to invest in, at the moment. TCS's performance on the market gave a fillip to yet another IT behemoth, WIPRO with a near 20 point gain on its stock price. Among the three top IT players, only WIPRO is now holding on to its trendiness on the weekly charts. Technically WIPRO does show strength, but fundamentally it is more weaker than the other two. Market is just tagging the stock along with TCS on expectations that it will also out perform on its Q4 results. What is in store has to be seen as days pass by?
Invest in the best performing stocks that have consistent growth in their earnings as well as price strength to earn a good return from the market. If we go sentimental or emotional in our stock picks, loss is the reward. If we invest in the best stocks on a regular basis, the possibility of 'Making a Living from Trading Stocks' will become a easy reality.
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