Infosys has lost about 11 percent of its market cap from Wednesday's close. The loss in market cap isn't the result of an earnings miss. Infosys reported 73 cents a share, in line with estimates and an improvement of 6 cents (8.2 percent) from 67 cents during the same period last year.
Unfortunately, what truly captures Wall Street's attention is guidance. Infosys was already trading below the widely followed 200- and 90-day moving averages, adding fuel to the liquidation based on chart technicals.
In my Infosys
The chart to watch for Infosys is the monthly chart. In the monthly chart, you can find this month's drop moving through the 60- and 90-month moving average. Both these levels offer support and resistance. More important, both offer a history of reactions with price retracements that suggest Infosys will once again trade above $40 soon. The next level of support doesn't come into play until $22. Infosys is far from testing the key support. Revenue is a bright spot for Infosys. Infosys is running at a full sprint with revenue hurtling over $7 billion annually. That is an extension of over 50 percent over 2010. Infosys' management blames reluctance of corporate buyers to purchase due to the economic situation. Based on sales it appears reasonable, and likely a short-lived obstacle.
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