PosiStep 16: News and announcements: signal vs noise
Every day brings headlines: an order win, a resignation, a share price "crash". Some news changes a company's future; most does not. This PosiStep shows how to tell the difference.
Types of company announcements
Listed companies must tell the exchange about important events. Common ones are quarterly results, large orders or contracts, acquisitions and mergers, management changes, corporate actions (PosiStep 9), credit rating changes and regulatory actions such as penalties or investigations.
Go to the source
The most reliable version of any news is the company's own filing with the exchange (NSE and BSE in India; the SEC in the US) or its official investor presentation. News articles summarise these filings, and headlines often exaggerate.
When a headline seems dramatic, read the filing itself: the numbers and the exact wording are usually calmer than the headline.
Does it really matter? Size and duration
Ask two questions. How big is it compared with the company? A ₹50 Cr order is huge for a company with ₹200 Cr of revenue and almost nothing for one with ₹50,000 Cr. Will it last? A one-time gain from selling land is different from a lasting rise in demand.
News that is large and lasting is a signal. News that is small or temporary is mostly noise, even if the share price jumps for a day.
Rumours, tips and social media
Messages such as "this stock will double, buy before it's too late" in WhatsApp or Telegram groups are a common route to losses and sometimes to deliberate scams, where a few people sell their shares to those who believe the tip (a "pump and dump").
If news cannot be traced to an official filing or a reliable source, treat it as noise. A tip is not research.
Price reactions
Prices often move before or on the day of news, and sometimes in the "wrong" direction, because markets react to news compared with what was expected. Good results that are below expectations can still push a price down.
Reacting instantly to every headline usually means buying high and selling low.
Where PositoAI fits
Each company has a News tab with its recent headlines linked to the original articles, and an AI summary on its Overview page. The main News section shows general market headlines. Regulatory actions also appear as flags on PosiFlag.
Key terms
- Filing
- An official announcement a company submits to the exchange or regulator.
- Material news
- News large enough to change a company's future profits or risks.
- Signal vs noise
- Lasting, significant news (signal) vs small or temporary news (noise).
- Pump and dump
- A scam that hypes a share so the promoters of the hype can sell at higher prices.
- Expectations
- What the market already assumed; prices react to news compared with these.
- Investor presentation
- A company's official slides explaining its results and plans.
Try it
Two made-up companies each announce a new order. Fern Engineering (yearly revenue ₹2,000 Cr) wins a ₹20 Cr order. Oak Engineering (yearly revenue ₹400 Cr) wins a ₹200 Cr order. Which order is more significant for its company?
₹20 Cr is 1% of Fern's revenue; ₹200 Cr is 50% of Oak's. Size compared with the company decides how much news matters.
See it live on PositoAI
Open Infosys's News tab and pick one headline. Decide: is it large compared with the company, and is it lasting or one-time? Then read its AI summary on the Overview page.
What this does not tell you
Even official news can be hard to judge, and its effect may only show over years. Neither headlines nor AI summaries can tell you what a share will do next.
Quick quiz
What is the most reliable source for company news?
The company's own filing with the exchange or regulator is the primary source; others summarise it.
A company with ₹300 Cr revenue wins a ₹150 Cr order. This order is:
₹150 Cr is half the company's yearly revenue, which is significant.
What is a pump and dump?
In a pump and dump, people promote a share to push its price up, then sell to those who believed the hype.
Good results are announced but the share falls. A likely reason:
Prices react to news compared with expectations; good but disappointing results can still push prices down.
Which news is most likely a lasting signal?
A large, long-term change to revenue is both big and lasting; the others are one-time or unverified.
Answer every question on this page correctly to complete this PosiStep.
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PosiCourse is for education only. It does not recommend buying or selling any share. Examples with made-up numbers are not real companies. PositoAI is for research and education only and is not investment advice.