Infosys ADR Soars on Short Squeeze, Hits 52-Week High

Infosys ADR Surges Sharply in Early US Trading

Infosys Ltd’s American Depository Receipt (ADR) witnessed a dramatic surge in early US trading, reaching a 52-week high as aggressive short-covering triggered temporary trading halts. The ADR opened nearly 40% higher before volatility controls were activated. By 21:37 IST, Infosys ADR was trading at $21.90, up $2.70 or 14.08%.

Short Squeeze Drives Sudden Price Spike

Market experts told Moneycontrol that the sharp rally was largely caused by a short squeeze. A major lender reportedly recalled a substantial portion of stock previously lent out, forcing traders with short positions to quickly cover their exposure in the open market. This rush to buy created upward pressure on prices, particularly in a stock that typically sees relatively thin trading.

Unusual Trading Volumes Trigger Extreme Price Movement

Infosys ADR usually records daily volumes of 7–8 million shares. However, the lender is rumored to have recalled 45–50 million shares—far exceeding normal volumes. This mismatch between forced demand and available liquidity appears to have amplified the price surge.

Understanding the Mechanics of a Short Squeeze

Short squeezes occur when securities with high borrow utilization, concentrated stock lending, and low free float face abrupt stock recalls or tighter borrowing conditions. Short sellers are compelled to buy back shares at increasingly higher prices, especially when daily trading volumes are small compared to outstanding short interest.

A well-known example is the GameStop frenzy in 2021, when coordinated retail buying created a historic short squeeze, driving the stock up over 1,700% at its peak. In such cases, the short interest exceeds the tradable free float, creating a situation where covering shorts without pushing prices dramatically higher becomes nearly impossible.

Technical Spike, Not a Sector Signal

Analysts emphasize that the Infosys ADR spike is a technical event, not an indicator of broader sector or company performance. Accenture’s recent quarterly results, released on December 18, provided a relatively neutral outlook for global IT services demand. The company reported first-quarter fiscal 2026 revenue of approximately $18.7 billion—6% year-on-year growth and at the high end of its guidance—alongside strong bookings in AI and managed services, segments in which Indian IT companies also compete.

Despite some softness in discretionary spending and mixed demand from the public sector, Accenture’s steady performance signals no significant decline in corporate IT spending. This environment supports Indian IT peers, including Infosys, TCS, HCLTech, and Wipro.

Indian IT ADRs Trade Normally Amid Volatility

While Infosys experienced an outsized move, other US-listed Indian IT ADRs, such as Wipro, TCS, and HCLTech, traded within normal ranges, showing no unusual volume spikes or disruptions from borrowed stock recalls.

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Sorit Chaudhary

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