Infosys Plunges 3.8%: What's Next for the IT Giant's Volatile Trajectory?

Summary
• Infosys (INFY) trades at $17.75, down 3.79% from its $18.45 previous close
• Intraday range of $17.59–$17.88 highlights sharp volatility
• Turnover surges to 3.65 million shares, signaling heightened investor activity

The IT services sector faces headwinds as Infosys' stock tumbles despite posting a 9% YoY net profit and revised FY26 guidance. With a 52-week range of $15.82–$23.63, the stock's sharp intraday decline raises questions about market sentiment amid macroeconomic uncertainties and sector-wide caution.

Q1 Earnings Spark Profit-Taking Amid Revised Guidance
Infosys' stock collapsed 3.79% despite reporting a 9% YoY net profit of ₹6,921 crore and a 3.3% YoY revenue growth. The market discounted the positive results due to revised FY26 revenue guidance (1-3% vs. 0-3%) and ongoing macroeconomic headwinds. Analysts highlighted that while the company demonstrated resilience in operating margins (20.8%) and secured $3.8 billion in large deal wins, the sector's cautious demand environment and geopolitical uncertainties overshadowed the results. The stock's decline reflects profit-taking by short-term investors and lingering doubts about the sustainability of IT spending in a high-interest-rate environment.

IT Sector Under Pressure as Accenture Trails INFY
The IT Services sector, led by Accenture (ACN) down 1.24%, saw broad-based weakness as global IT budgets remain constrained. Infosys' 3.79% drop outperformed the sector's average decline, indicating divergent investor sentiment. While Infosys' revised guidance and AI-driven growth strategies attract long-term buyers, near-term macroeconomic concerns—such as unresolved tariffs and geopolitical tensions—continue to weigh on sector-wide momentum.

Options Playbook: Capitalizing on INFY's Volatility
• 200-day MA: $20.18 (well above current price)
• RSI: 41.08 (oversold territory)
• MACD: -0.0203 (bearish divergence)
• Bollinger Bands: $17.90–$19.10 (price near lower band)

INFY is trading in a tight range with strong support at $17.90 and resistance at $18.50. The 52-week range suggests limited upside potential in the near term, but the oversold RSI and negative MACD histogram indicate potential for a rebound. Aggressive bulls may consider INFY20250815C18 (call) for a bounce above $18.50, while bears could target INFY20250815P17 (put) for a breakdown below $17.59.

INFY20250815C18 (Call)
• Code: INFY20250815C18
• Strike: $18.00
• Expiration: 2025-08-15
• IV: 26.27% (moderate)
• Delta: 0.424 (moderate sensitivity)
• Theta: -0.0148 (moderate time decay)
• Gamma: 0.3348 (high sensitivity to price moves)
• Turnover: 5,605 (liquid)
Rationale: This call offers a balance of leverage (50.63%) and liquidity, ideal for a short-term bullish breakout above key resistance.

INFY20250815P17 (Put)
• Code: INFY20250815P17
• Strike: $17.00
• Expiration: 2025-08-15
• IV: 24.19% (moderate)
• Delta: -0.232 (moderate sensitivity)
• Theta: -0.0038 (low time decay)
• Gamma: 0.2833 (high sensitivity)
• Turnover: 223 (liquid)
Rationale: The put's high leverage (118.13%) and moderate IV make it a compelling bearish play if support at $17.59 breaks.

If $18.50 breaks, INFY20250815C18 offers upside potential. If $17.59 fails, INFY20250815P17 could capitalize on a sharp decline.

Backtest Infosys Stock Performance
After a -4% intraday plunge, Infosys (INFY) has historically shown a positive short-to-medium-term performance. The backtest data reveals that the 3-day win rate is 54.50%, the 10-day win rate is 55.33%, and the 30-day win rate is 55.83%, indicating a higher probability of a positive return in the immediate aftermath of such a plunge. The maximum return observed was 2.02% over 30 days, suggesting that while the stock may experience some volatility, it tends to recover and even exceed its pre-plunge levels.

INFY at Crossroads: Navigating Volatility and Sector Dynamics
Infosys' sharp selloff reflects a mix of profit-taking and macroeconomic caution, but its revised guidance and AI-driven growth position it as a potential rebound candidate. Watch for a test of the $17.90 support level and a breakout above $18.50. Sector leader Accenture's -1.24% decline underscores the IT sector's fragility. Investors should monitor INFY's ability to hold the 200-day MA and key resistance levels. Aggressive traders may consider the INFY20250815C18 call for a bullish breakout or the INFY20250815P17 put for a bearish breakdown.