Infosys Surges 9.5% on Earnings Beat and Revised Outlook: Can This Momentum Sustain?

Summary
• Infosys (INFY) rockets 9.53% intraday to $19.19, breaking through 52-week high of $30.
• Q3 earnings of $747M top estimates by 5%, revenue of $5.1B exceeds forecasts by $20M.
• Sector leader Accenture (ACN) gains 3.26%, signaling IT Services sector strength.

Infosys’ explosive move follows a Q3 earnings report that outperformed Wall Street’s expectations on both revenue and profit. With the stock trading near its 52-week high and the IT Services sector showing resilience, investors are recalibrating their strategies. The intraday high of $19.355 and low of $18.07 highlight the stock’s volatile yet bullish trajectory.

Q3 Earnings Beat and Raised Revenue Forecast Fuel Infosys Rally
Infosys’ Q3 results, reported at $747M in earnings and $5.1B in revenue, exceeded Zacks’ estimates by 5% and 0.4%, respectively. The company raised its annual revenue forecast, citing strong demand for digital transformation services. This optimism is compounded by India’s IT sector outperforming global peers, with Infosys benefiting from its diversified client base and cost-optimization strategies. The 9.53% intraday surge reflects market confidence in the firm’s ability to capitalize on AI-driven IT services and global macroeconomic tailwinds.

IT Services Sector Gains Momentum as Accenture Leads with 3.26% Rally
The IT Services sector, led by Accenture’s 3.26% intraday gain, shows broad-based strength. Infosys’ 9.53% move outpaces sector peers, underscoring its unique positioning in AI and cloud services. While the sector’s average P/E of 24.15 aligns with Infosys’ 24.15 P/E, the latter’s earnings beat and revised guidance have created a performance gap. This divergence suggests Infosys is outpacing peers in execution, particularly in North America and Europe, where demand for hybrid cloud solutions remains robust.

Options and ETF Plays for Infosys’ Volatile Bull Run
• 52W High: $30.00 (above current price)
• 52W Low: $15.815 (far below)
• 200D MA: $17.48 (below current price)
• RSI: 28.65 (oversold)
• MACD: -0.01 (bearish), Signal Line: 0.12 (bullish divergence)
• Bollinger Bands: Upper $19.61, Middle $18.30, Lower $16.99 (current price near upper band)

Infosys’ technicals suggest a short-term overbought condition but a long-term bullish setup. The RSI at 28.65 indicates oversold territory, while the MACD histogram’s negative value (-0.13) hints at potential reversal. Key support at $18.30 (middle Bollinger Band) and resistance at $19.61 (upper band) define the near-term range. Aggressive bulls may consider call options with strike prices near $18–$19, given the stock’s proximity to its 52-week high.

Top Options Picks:
• INFY20260220C19 (Call, $19 strike, Feb 20 expiration):
- IV: 30.05% (moderate)
- LVR: 22.58% (high leverage)
- Delta: 0.56 (moderate sensitivity)
- Theta: -0.0129 (moderate time decay)
- Gamma: 0.21 (high sensitivity to price movement)
- Turnover: 424,313 (high liquidity)
- Payoff (5% upside): $1.15/share (ST = $20.15)
- Why: High gamma and turnover make this ideal for a continuation of the bullish trend.

• INFY20260220C18 (Call, $18 strike, Feb 20 expiration):
- IV: 40.92% (moderate)
- LVR: 11.29% (moderate leverage)
- Delta: 0.71 (high sensitivity)
- Theta: -0.0147 (moderate time decay)
- Gamma: 0.13 (moderate sensitivity)
- Turnover: 8,451 (high liquidity)
- Payoff (5% upside): $2.15/share (ST = $20.15)
- Why: High delta and turnover offer a balance of directional exposure and liquidity for scaling in/out.

Backtest Infosys Stock Performance
Following an intraday surge of 10% from 2022 to the present, the performance of Infosys (INFY) was backtested. The strategy resulted in a -27.20% return, significantly underperforming the benchmark, which achieved a 48.07% return. The strategy had a maximum drawdown of 43.26%, a Sharpe ratio of -0.29, and a volatility of 26.80%, indicating high risk and substantial losses.

Bullish Momentum Unlikely to Subside as Sector Leader Accenture Gains Ground
Infosys’ 9.53% surge is underpinned by strong Q3 results and a favorable IT Services sector backdrop. While the RSI suggests a potential pullback, the stock’s proximity to its 52-week high and the sector’s strength—led by Accenture’s 3.26% rally—indicate sustained momentum. Investors should monitor the $19.61 upper Bollinger Band as a critical resistance level. A break above this could trigger a retest of the $30.00 52-week high. For now, the INFY20260220C19 and C18 options offer high-gamma plays to capitalize on the bullish trend. Watch for a continuation above $19.35 or a sector-wide reversal to adjust positions accordingly.