Correction After Good Results

Correction After Good Results 

Though certain firms (like Natco Pharma, Edelweiss, IOC) reported healthy Q1 earnings, their prices corrected sharply on the day after their results were announced. Many investors, who are retail investors like me, cannot understand this peculiar behavior of the market. Kindly clarify on this. 

- L.S.Sivakumar 

Editor Responds: 

Thank you for writing us your query. The reason for such correction, even after reporting stellar quarterly earnings, may be that the street earning estimates are on the higher side, or the market might have already factored in the earning growth as seen in the case of Natco Pharma and Edelweiss, which have witnessed good run-up in their stock prices before the quarterly earnings and later corrected due to profit-booking. However, if the company is consistently reporting strong earnings, then you should stay invested and not to worry about short term noise.benefit from our suggestion. Keep writing to us and keep booking profits.