You have a stock in your portfolio and suddenly news flash that someone from key-board member walks away. Does management change affects stocks and so your earning? How will it impact on your stock portfolio? Management change is a micro factor which affects positively or negatively. It totally depends on whether a weak or strong leader left and vice versa.
Recently, Mr. Vishal Sikka the MD & CEO of Infosys left the organization. The moment news flashes of his resignation, the stock fell by more than 15% in a very short time. Markets, investors, customers all reacted to the news and the stock started to fall.
Learning Outcome From How Infosys Management Change Affects Stocks
Since last one and year, Infosys has been facing huge turbulent. After Vishal Sikka quit, a war of words between the company’s board and its founder, NRN Murthy shock the stock markets. Then came the announcement of a Rs 13,000 crore buyback.
Furthermore, the panic did not stop as some US-based law firms are investigating an alleged violation of US laws by either Infosys or its officials. Such kind of incident break confidence in the minds of investors who in turn punished the stock to such an extent that Infosys share price slipped insanely.
Nandan Nilekani’s Re-Entry: The Turn Around Period
All these dramas come to an end when former Co-founder and CEO Nandan Nilekani joined the company again as non-executive chairman. Infosys shares rallied and recovering from crash and CLSA also recommending it to buy. Nandan Nilekani’s return will actually boost the company to regain its status. In addition, it will also enhance investors and their client’s confidence.
Brokerage and research houses also step up to support Nilekani’s appointment. It is a significant step in restoring faith in Infosys’ corporate governance and will also drive the company further. He will be responsible for board oversight & functioning and choosing a new CEO for the company as a non-executive director.
If you have invested in Infosys then it will be a great relief for you as the battle has come to halt for the time being. Now can Nilekani revive Infosys and take it to the next level. I am sure investors and its clients react to the development and will bring fruitful results.
What Will You Do As Investor?
So, from Infosys story, you can learn micro factor like management change which can really affect stock price. The stock price may move like you are on a roller coaster ride. So, before taking your calls, carefully analyze your decision when to enter or exit. Right decision can help you to make money from online stock trading and investment. Management change affects stocks and market may react either negatively or positively.
If you are retail investors, then you should definitely tender shares in the buyback process till complete clarity emerges. So, before you invest check all the fundamentals and technical aspects of the stocks.
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Author: Ratan Kumar
Ratan Kumar, an enthusiast stock market trader & blogger. Forecasting stock market moves with the use of technical analysis since 2008. For the technical trader & investor, new or experienced, he provides legitimate and valuable advisory from day trading to long-term investment horizon and helped thousands of investors to make money out of stock market.