Oct. 11 (Bloomberg) -- Options traders are the most bearish on Infosys Ltd. in seven months on speculation India’s second- biggest software maker may cut its earnings forecast amid uncertainties in the global economy.
The ratio of outstanding puts to sell the shares versus calls to buy reached 0.86 yesterday, the highest since March, data compiled by Bloomberg show. Infosys has dropped 27 percent this year, compared with a 19 percent slide in the benchmark BSE India Sensitive Index.
Infosys may tomorrow report profit of 18.8 billion rupees ($383 million) for the quarter ended September, compared with 17.4 billion a year earlier, according to the median estimate of 28 analysts surveyed by Bloomberg. Customers in Europe and North America contributed almost 87 percent of the company’s sales in the year ended March 31, the data show.
“When the U.S. and Europe are not doing that great, some cut in earnings forecast is likely to happen,” Jagannadham Thunuguntla, chief strategist at New Delhi-based SMC Wealth Management Services Ltd., told Bloomberg Television today. “They will probably give an indication of a bearish outlook with clients cutting their information technology spending.”
Infosys, which has the second-highest weighting on the Sensex, fell 3 percent to 2,513.6 rupees at 1:08 p.m. Mumbai time, ending a three-day, 6.2 percent advance. A rally in the rupee also contributed to the decline as a stronger currency makes exporters less competitive.
“Traders are buying protection amid uncertainty on the revenue outlook for the next two quarters,” said Savio Shetty, derivatives strategist at Prabhudas Lilladher Pvt. in Mumbai. “The rupee rise is also weakening sentiment.”
The rupee strengthened for a fourth straight day, rising as high as 48.8675, the highest level since Sept. 29.
A call option gives investors the right to buy a security at a set price by a specific date. A put option gives the right to sell. Investors use options to guard against fluctuations in the prices of securities they own, speculate on share-price moves or bet that volatility will rise or fall.
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