Infosys Plummets 2.5% Amid Strategic Collaboration Buzz: What's Fueling the Selloff?

Summary
• Infosys (INFY) trades at $16.925, down 2.5% intraday amid a strategic partnership with Mastercard to scale cross-border payments.
• The stock trades below its 30-day moving average of $16.98 and 200-day average of $19.50, signaling bearish pressure.
• RSI hits 83.5, indicating overbought conditions, while MACD (-0.056) and negative histogram (-0.185) suggest bearish momentum.

Infosys’ sharp intraday decline defies the upbeat news of its Mastercard collaboration, sparking questions about market sentiment and technical resistance. With the stock trading near its 52-week low of $15.82 and Bollinger Bands tightening, traders are scrutinizing whether this selloff reflects profit-taking or deeper concerns about execution risks in the partnership.

Mastercard Collaboration Fails to Offset Technical Weakness
Despite the strategic collaboration with Mastercard to streamline cross-border payments via Infosys Finacle, INFY’s intraday price action reveals bearish technical pressure. The stock opened at $17.00 and immediately tested the 30-day moving average ($16.98) before plunging to an intraday low of $16.89. This move aligns with the RSI’s overbought reading (83.5) and MACD’s bearish crossover, suggesting short-term profit-taking after the stock’s 52-week high of $23.63 in 2024. The partnership, while strategically sound, lacks immediate revenue visibility, and the market may be pricing in execution risks given Infosys’ 21.68 P/E ratio, which lags behind sector leader Microsoft’s (MSFT) 0.26% intraday gain.

Software & Services Sector Mixed as Microsoft Outperforms
The Software & Services sector remains fragmented, with Microsoft (MSFT) rising 0.26% despite INFY’s decline. While Infosys’ collaboration with Mastercard targets cross-border payment growth, Microsoft’s Azure and AI-driven cloud infrastructure continue to attract institutional demand. INFY’s 21.68 P/E ratio, however, remains a drag compared to MSFT’s premium valuation, highlighting divergent market perceptions of growth execution and margin resilience.

Bearish Setup: Put Options and Short-Term Resistance Levels
• 200-day average: $19.50 (below current price); RSI: 83.5 (overbought); MACD: -0.056 (bearish); Bollinger Bands: 15.61–17.54 (tightening).

INFY’s technicals point to a bearish near-term bias, with key resistance at the 200-day MA ($19.50) and support at the 200D Bollinger Band ($15.61). The RSI’s overbought condition and negative MACD histogram (-0.185) suggest a potential pullback. For options traders, the INFY20250919P17 put option (strike $17, expiration 9/19) and INFY20251017P16 put (strike $16, expiration 10/17) stand out:

• INFY20250919P17: Delta -0.507, IV 22.23%, leverage 42.35%, turnover 185. This put offers moderate delta sensitivity and reasonable IV, ideal for a 5% downside scenario (targeting $16.08).
• INFY20251017P16: Delta -0.279, IV 30.07%, leverage 48.40%, turnover 69. The longer-dated option provides higher leverage and liquidity, suitable for a 7% decline (targeting $15.64).

Both contracts benefit from high gamma (0.421 and 0.176) and theta decay (-0.002 and -0.0047), amplifying gains if INFY breaks below $17. Aggressive bears may consider the INFY20250919P17 put into a test of the 200D Bollinger Band ($15.61).

Backtest Infosys Stock Performance
Query limit exceeded.

INFY’s Bearish Bias Intact: Watch 200D MA and RSI 50 Crossover
INFY’s technicals and options activity reinforce a bearish near-term outlook, with the 200-day MA ($19.50) and RSI 50 crossover as critical inflection points. While the Mastercard collaboration offers long-term upside, immediate execution risks and profit-taking pressure dominate sentiment. Traders should monitor the 200D Bollinger Band ($15.61) as a potential support level and watch for a RSI retest of 50 to confirm a reversal. With Microsoft (MSFT) outperforming the sector, INFY’s ability to close above its 30-day MA ($16.98) will determine whether this selloff is a buying opportunity or a deeper correction. Action: Short INFY into a break below $17, or buy the INFY20250919P17 put if $16.08 is breached.