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Infosys shares spike on earnings beat

Friday, January 12, 2024

Today’s headlines

What’s happening: Shares of Infosys gained on Thursday, after the company reported results for its third quarter.

What happened: India’s second largest IT (information technology) services provider reported better-than-expected sales for the latest quarter.

However, Infosys recorded its first year-over-year decline in profits since the quarter ending September 2019.

How were the results: The company reported a single digit decline in profits for the seasonally weak third quarter.

  • Revenues grew by around 1% to $4.66 billion, exceeding the consensus estimates of $4.63 billion.
  • Consolidated net profits declined 7.3% year-over-year to $735.55 million.
  • Earnings came in at 18 cents per share, in-line with the Wall Street expectations.

Why it matters: The IT sector had witnessed a spike in demand during the covid-19 pandemic due to a boom in digital services. However, the sector has not been able to maintain the positive momentum in recent quarters, with clients lowering their overall spending on account of higher inflation and economic growth concerns.

Russia’s ongoing war on Ukraine has also resulted in increased economic uncertainty for businesses.

Infosys said its operating margins shrank by 100 basis points (bps) to 20.5% in the quarter, amid wage increases and furloughs.

Large deal signings came in at $3.2 billion for the quarter, compared to $3.3 billion in the year-ago period.

“Large deal wins were strong at $3.2 billion, with 71% of this as net new, reflecting the relevance and strength of our portfolio of offerings ranging from generative AI, digital, and cloud to cost, efficiency, and automation,” CEO Salil Parekh said.

Management revised their full-year revenue growth outlook for the third quarter in a row to 1.5%-2% on a constant currency basis, higher than the prior forecast of 1%-2.5%.

How shares responded: Shares of Infosys rose 4% to close at $18.82 on Thursday on the NYSE, following the release of quarterly results. The stock has gained around 17% over the past six months.

What to watch: Investors will continue monitoring overall inflation levels and spending by businesses. Markets will also monitor the adoption of AI by clients.

The markets today

The EUR/USD forex pair will be in focus today ahead of PPI data from the US

Context: The EUR/USD pair edged lower on Thursday, following the release of US inflation data.

Details: Data released on Thursday showed US consumer prices for December coming in above markets estimates, which raised doubts around the Federal Reserve taking longer to begin lowering interest rates.

The headline US Consumer Price Index increased 0.3% in December, versus market estimates of 0.2%. The annual inflation rate in the country rose to 3.4% last month, against expectations of 3.2%. The annual core inflation eased to a 2.5 year low of 3.9% in December but came in above market estimates of 3.8%.

Other US data released showed the number of persons filing for jobless benefits declined by 1,000 to a reading of 202,000 in the week ending January 6, compared to market estimates of 210,000.

Traders widely expect the US Federal Reserve to begin cutting interest rates in March amid a weakening economy and inflation moving closer to the central bank’s 2% target.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 102.29 on Thursday. The EUR/USD forex pair declined slightly to 1.0972, after swinging between wide gains and losses during the session.

What to watch: Investors await the release of PPI (producer price inflation) data from the US today. Producer prices in the US, which steadied in November, are expected to increase by 0.1% in December.

Other Markets: European indices closed lower on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.98%, 0.86%, 0.52% and 0.77%, respectively.

The news shaping the markets

The US imposed sanctions on three Russian entities and an individual for their involvement in the transfer of North Korea’s ballistic missiles for use against Ukraine. The news sent the safe-haven gold higher this morning.


China’s trade surplus widened to $75.34 billion in December, from $70.65 billion in the year-ago period. The latest reading exceeding market estimates of $74.75 billion lent support to the CNY/USD forex pair.


Australia’s value of new home loans for owner-occupied homes increased by 0.5% to A$17.86 billion in November, topping market expectations of a flat reading, which sent the AUD/USD pair higher in forex trading this morning.


Japan’s value of loans rose 3.1% year-over-year in December, accelerating from the 2.8% growth recorded in November, which lent support to the JPY/USD forex pair.


Argentina’s monthly inflation rate accelerated to 25.5% in December, from 12.8% a month ago, sending the ARS/USD pair lower in forex trading this morning.

What else to watch today

Turkey’s current account and retail sales, UK’s GDP, goods trade balance, industrial production, manufacturing production, balance of trade and construction output, France’s inflation rate, Spain’s consumer prices, Russia’s total vehicle sales and inflation rate, India’s bank loan growth, deposit growth, foreign exchange reserves, industrial production, retail price inflation and manufacturing production, US Baker Hughes total rigs, as well as China’s new yuan loans, money supply M2, outstanding yuan loans and total social financing.


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