MphasiS Ltd’s shares rose 4.02% on Thursday in response to its earnings announcement on the preceding day. It’s a mystery why the prices rose. The firm’s performance worsened last quarter with total revenue declining by 5.2% to $251.9 million (around 1,400 crore today).

The outlook for the HP business, especially the enterprise solutions segment, remains weak, with project ramp downs continuing. According to analysts at Dolat Capital, “Earnings visibility for the company remains low on account of uncertain volume/billing from HP—the renegotiation with HP is due in October." Additionally, it’s unreasonable to assume that non-HP customers will make up for the decline in HP revenue—especially given the muted demand environment for IT services. MphasiS itself is wary about its prospects going forward—it reduced its headcount in the application services and infrastructure technology outsourcing services segments by 906 employees, or 4.4%.

Which brings us back to the surprising increase in the company’s shares—the only explanation for the jump appears to be the fact that they had declined by 5.5% in the week until the results announcement, at a time when the CNX-IT index was flat. So one can argue that investors were already expecting weak results and had sold MphasiS shares in anticipation. But there’s no reason why the shares should recover these losses, especially after its weak results. While valuations remain low at around nine times one-year forward earnings, successive earnings disappointments mean investors’ interest should be low