How do quarterly earnings report affect stock prices in stock market?

Corporate earnings season has begun and this is the time during which publicly-traded companies announce their financial results in the market.

The market becomes a little volatile after companies report their April-June 2018 quarter results as investors react to the earnings announcement by listed companies.

As these financial results evoke market reactions and becomes a critical parameter, which indicates how the stocks will likely be valued in the future.

Usually, share prices tend to rise, when earnings results exceed market expectations and disappointing earnings results tend to lower share prices at least in the short term.

As many as 123 companies listed on Bombay Stock Exchange (BSE) have declared their quarterly results for the April-June period as on Friday.

 

Up to 86 such companies have given negative returns since the day of result announcement as compared to 36 companies, which witnessed share price increase, post declaring quarterly results.

Smruthi Organics, a micro-cap pharmaceutical company, saw the maximum surge in its share price since the company declared its June quarter results on July 16, 2018. The share price of the company is up 18.5 percent since then.

Another micro-cap company, Aro Granite Industries, a manufacturer of ceramic products, also generated positive market sentiments since it declared its results on July 21, its share price increased 16.3 percent.

The share price of VST Industries, a prominent player in the low-priced cigarettes segment, is also up 16 percent as it declared its quarterly results on the same day as Aro Granite.

Bandhan Bank is trading almost 15 percent higher, since the day it announced its June quarter results.

On the other hand, a small-cap iron and steel company, Prakash Industries, failed to impress its investors, and its stock price plummeted almost 30 percent post results.

Similarly, Biopac India, a micro-cap packaging company witnessed a 26 percent fall in its share price, since it declared its financial result on July 13.

GM Breweries, the single largest manufacturer of country liquor in Maharashtra, is also down 24 percent post results.