Infosys ADR soars 40% after massive short squeeze, triggers trading halt

Infosys ADR typically sees daily volumes of around 7–8 million shares.

Infosys Ltd’s American Depository Receipt (ADR) surged sharply in early US trade, hitting a 52-week high as aggressive short-covering triggered a trading halt. The stock opened nearly 40 percent higher before volatility controls kicked in. At 21:37 IST, Infosys ADR was trading at $21.90, up $2.70, or 14.08 percent.

Traders Moneycontrol spoke to said the sharp move was driven by a short squeeze, after a major lender recalled a large chunk of stock lent out in the market. The sudden recall forced traders with short positions to rush into the open market to cover their exposure, bidding up prices sharply in a thinly traded counter.

Infosys ADR typically sees daily volumes of around 7–8 million shares. However, the lender is rumoured to have recalled 45–50 million shares, a quantum far exceeding normal trading volumes. The mismatch between available liquidity and forced buying appears to have triggered the outsized price move.

Short squeezes are a recurring feature of US markets, particularly in securities with high borrow utilisation, concentrated stock lending, and thin free float. When lenders recall shares or when borrowing availability tightens abruptly, short sellers are forced to cover positions in the open market, often at progressively higher prices. The impact is magnified in counters where daily traded volumes are small relative to outstanding short interest, creating a mechanical imbalance between forced demand and available supply.

One of the most famous examples was GameStop in 2021, when coordinated retail buying led to a historic short squeeze that sent the stock up more than 1,700 percent at its peak. The GameStop squeeze happened because short interest exceeded the tradable free float, which made it mathematically difficult — and briefly impossible — for shorts to buy back shares without sending prices vertical.

The spike in Infosys was purely technical and does not signal anything good or bad about the sector or the company. Accenture’s latest quarterly results, announced on December 18, offered a relatively benign read-through for the global IT services demand environment, which in turn has helped calm nerves around Indian IT stocks. The US-listed consulting and tech services giant reported better-than-expected revenue of about $18.7 billion in its first quarter of fiscal 2026, roughly 6 percent year-on-year growth and at the top end of its guidance range, along with double-digit increases in bookings, particularly tied to AI and managed services, a segment where Indian vendors also compete.

Despite lingering signs of soft discretionary spending and mixed public-sector demand, Accenture’s steady outlook suggests there has been no broad deterioration in corporate IT spending, which many analysts see as supportive for Indian IT peers such as Infosys, TCS, HCLTech and Wipro.

US-listed Indian IT ADRs such as Wipro, Tata Consultancy Services and HCLTech were trading within a normal range, with no signs of unusual volume spikes or borrow-driven dislocations.