It has been observed that after the earnings report is released, the stock prices do not adjust as fast as they are expected to be under the efficient market hypothesis. Thus in the event of earnings surprise the investors can earn excess returns by investing the stock. This is violation of the semi strong form of efficiency. Thus the investor by following earnings season can expect to earn extra return. Normally, it has been observed that the firms which give out positive earnings surprise tend to rise and the investors invest in such stocks. However even if the firm posts strong results but it does not meet the expectation of the investors in that event the firm stock price is beaten down by the market and it gives negative returns. Further it has been observed that the stocks with low P/E ratio tend to give more positive returns in the event of the positive earnings surprise. However in the event of the negative earnings surprise it is the stock with high P/E which gets beaten down more.