THE GAME OF QUARTERLY RESULTS🔻

In this Q2 season many clients came in panic to sell the stock as they saw news of company posting bad results. Some came with opportunity sparkling in their eyes as they saw positive results of a company that they wanted to add in their portfolio.

While it is excellent to track the quarterly results of the company, it is crucially important to understand media houses are made to create fear or greed among retail investors - that’s their primary job to make their article catchy enough.

Stockmarket operates differently in short term, if you’re trading intra day or F&O its a 0 sum game. Meaning you are competing with someone to snatch money from their pockets, while this may sound cool but in reality you’re up against guys with billions of dollars, unlimited early access to information and a decade experience of analysing companies. You really think they will let you snatch money out of their pockets so easily?

Making trades reading the headlines of Quarterly Results maybe one of the worst mistake made by all new investors (including us). Let us give some examples :

A close friend of mine was utterly excited to know about IndiaMart as the headlines said it posted very healthy Quarterly sales growth and profit. While analysing the report we found that sales growth of the company didn’t come from new customers but charging its current customers higher prices.

This is never a positive sign, as India is price competitive country. You can push prices to only certain limits and then customers may opt your competitors. Hence its important to have sales volume when analysing sales growth.

The pro analyst saw this and while headlines were very positive of the stock, when market opened we saw sharp selling in stock📉. Only if we understand such news maybe created to build liquidity in stock i.e operators want buyers for the stock they wanna sell.

Don’t get us wrong, this is not for every news and every stock. But it is important for staying cautious and reading reports yourself, instead of relying on news and social media channels.

We got opposite situation in IDFC first bank, where the news was very fearful but when we read the reports, it wasn’t that bad and honestly some improvement in stock.

To analyse reports, take help of two things - Financial number analysis with screener.in and PPT of Quarterly reports.

To analyse the indepth info - read the concall of the company.

Many times the company may post excellent results but in concall management is not confident on demand for next quarters, which may bring negative sentiments in the stock and after a small spike stock may consolidate or correct. Always remember - stockmarket operate on future sentiments, i.e it likes to anticipate what will happen not what is happening.

This happened with Tata Motors, during june quarter. Company posted very optimistic earnings but still there were many signs of a cyclical downturn in business. Hence we never bought with squad, we may now add for long term when stock starts consolidating at any level from here✔️.

It’s okay to anticipate good or bad results but don’t panic sell or greed buy stocks based on headlines. Understand fundamentals more closely and then make your decision more wisely🧘

Regards,

Team GROWTHSQUAD.

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