Infy ​​to open with deep cut as ADR falls by 10% after poor Q4

The weak sentiment was most pronounced in Infosys, HCL Tech, TCS. wiproAnd Tech Mahindra ahead of Infosys’ quarterly earnings on Thursday. This may affect Bellwether smelly The index in which IT has a weighting of 14.11% is second only to the financial services sector with a weighting of 37.72%.

Except for Tech M, the creation of shorts was indicated by the most active futures contract open interest (OI) – outstanding buy-sell positions – among these firms, rising even as the contract price fell, indicating a bearish market. Signal.

Infosys contracts saw an 8.3% rise in OI over the previous session as the price fell 2.7% on Thursday. HCL Tech, the best performing large cap IT stock in the past one year, saw a 5.2% rise in contract OI overnight as the contract price fell 2% amid the resignation of Anand Birje, the company’s digital services business head.

TCS The next OI was 4.8% and the price was down 1.6%. Wipro saw a 2.2% increase in common touch OI as price improved 1%. Tech M was the only stock that saw a slight drop in OI while price improved, underscoring the long run. Outstanding interest fell 0.6% due to a 2% drop in price.

Infosys could open Monday with deep losses, as its ADR fell 9.78% to $15.56 on Thursday after the company missed the Street’s revenue and profit expectations for the March quarter and traders traded counters ahead of the results announcement. Bet on recession. Though Q4 results were released after market hours in India, the stock closed 2.74% lower 1,389.20 as traders expected a weak result. This was evident in heavy short build-up at the futures and options counter of Infosys.

The first common futures contract saw OI-outstanding positions at around 88,168 contracts (400 shares make up one contract) on Thursday from 81,385 contracts in the previous session. The contract also dropped 3% from the previous session.

A rise in OI along with a decline in the contract price exposes a bearish structure.

“This indicates heavy short build up, which will weigh on Monday’s opening price,” said Rajesh Palvia, VP (Technical & Derivatives), Axis Securities.

“I think the price could test the immediate support 1,300.” Palvia’s immediate forecast implies a 6% improvement from Thursday’s levels.

He expects the stock to trade lower over the next few quarters, but added that long-term investors could use the correction to accumulate the stock.

Brokerage Motilal Oswal reiterated buy target on the stock and also expected short term weakness on the counter citing possibility of low double digit correction. “We expect large revenue misses and high uncertainty to adversely impact the short-term performance of the stock, resulting in a negative reaction from high single to low double digits due to pessimism.”