Castrol profits catch punter on wrong foot

Castrol profits catch punter on wrong foot

A group of operators found themselves on the wrong foot after their bets on Castrol India’s earnings went sour, causing a sharp fluctuation in the stock price in the early trading hours of Tuesday.

The automobile lubricant maker had announced a 19% decline in net profit after market hours on Monday, a drop from Rs 117 crore in the quarter ended September 2010 to Rs 95 crore now. Expenditure on raw materials increased 17% YoY to Rs 380 crore. The operators, who had built up large short positions on the stock, had overestimated the decline in profits, miscalculating the likely impact of crude prices on earnings, dealers in the know said. On Tuesday morning, the operators covered frantically, pulling the stock from a steep decline and pushing it to Rs 501, the highest in over a month. On Wednesday, a day after all the excitement, Castrol ended marginally lower at Rs 479, after maintaining a firm trend for most of the day.