Infosys Plunges 3.26%: What's Behind the Sudden Downturn?

Summary
• INFY drops to $18.535, down 3.26% from previous close of $19.16
• Intraday range narrows to $18.515–$19.02 amid heavy turnover of 8.8M shares
• RSI at 65.6 and MACD divergence hint at bearish momentum despite 52W range of $15.82–$30

Infosys faces a sharp intraday selloff as technical indicators and options activity signal growing bearish pressure. With the stock trading near its 52-week low and key moving averages acting as resistance, traders are recalibrating positions ahead of critical support levels. The options chain reveals heightened activity in out-of-the-money puts, suggesting a shift in sentiment toward downside protection.

Technical Divergence and Options Pressure Weigh on INFY
The 3.26% decline in INFY reflects a confluence of technical exhaustion and bearish options positioning. Price action shows a breakdown below the 30-day moving average ($17.67) and 200-day average ($17.51), with the 200-day line acting as a critical psychological floor. The RSI at 65.6 indicates neutral momentum, but the MACD histogram (-0.168) and negative theta decay (-0.016) in key call options suggest short-term bearish bias. High turnover in the $18 put options (108,395 contracts) and $17 call options (11,550 contracts) underscores a shift toward downside hedging and profit-taking in long-dated calls.

IT Sector Mixed as Accenture Holds Steady, INFY Struggles
While the broader IT sector remains range-bound, INFY's 3.26% decline outpaces its peer Accenture (ACN), which fell just 0.17%. The divergence highlights INFY's vulnerability amid sector-wide profit-taking. ACN's stability suggests IT services demand remains resilient, but INFY's technical breakdown and elevated put/call ratio indicate unique near-term risks. Sector ETFs like XLK remain neutral, but INFY's underperformance points to specific catalysts unrelated to macro IT trends.

Bearish Put Spreads and Call Theta Decay: Navigating INFY's Volatility
• 200-day average: $17.51 (below price)
• RSI: 65.6 (neutral)
• Bollinger Bands: $16.50–$19.48 (price near lower band)
• MACD: 0.525 (signal line 0.357, bearish crossover)
• Put/call ratio: 1.3x (elevated bearish bias)

Key levels to watch: 1) $17.72 (30-day support), 2) $16.50 (Bollinger Band floor). Short-term bearish bias persists as INFY tests critical support. Two top options for bearish exposure:

1. INFY20260116P18
• Put option, strike $18, expiration 2026-01-16
• IV: 52.39% (high volatility)
• Delta: -0.388 (moderate sensitivity)
• Theta: -0.0133 (moderate time decay)
• Gamma: 0.1507 (high sensitivity to price moves)
• Turnover: 108,395 (high liquidity)
• LVR: 24.69% (strong leverage)
• Payoff at 5% downside ($17.61): $0.39/share
This put offers optimal leverage with high gamma to capitalize on a potential breakdown below $18. The high turnover ensures liquidity for entry/exit.

2. INFY20260116C17
• Call option, strike $17, expiration 2026-01-16
• IV: 40.27% (moderate volatility)
• Delta: 0.808 (high sensitivity)
• Theta: -0.0178 (high time decay)
• Gamma: 0.1392 (strong sensitivity)
• Turnover: 11,550 (solid liquidity)
• LVR: 10.58% (modest leverage)
• Payoff at 5% downside ($17.61): $0.00 (out-of-the-money)
While the call is out-of-the-money, its high delta and gamma make it ideal for a short-term bounce trade if INFY rebounds above $17.51. The high theta decay creates urgency for a quick move.

Aggressive bears should prioritize the $18 put for its leverage and liquidity. If INFY breaks below $17.72, consider rolling into the $17 put for amplified exposure.

Backtest Infosys Stock Performance
The backtest of Infosys (INFY) after a -3% intraday plunge from 2022 to the present shows mixed results. While the 3-Day, 10-Day, and 30-Day win rates are relatively even, the overall return has been negative, with a maximum return of only 0.04% over 30 days. This suggests that while INFY may bounce back in the short term, long-term returns have been lackluster.

Bullish Break Above $19.02 or Bearish Break Below $17.72 to Define INFY's Path
The immediate outlook hinges on INFY's ability to reclaim the $19.02 intraday high or break below the $17.72 support level. A sustained close above $19.02 would validate a short-term rebound, while a breakdown below $17.72 could trigger a test of the $16.50 Bollinger Band floor. With Accenture (ACN) down just 0.17%, sector-wide weakness is unlikely. Traders should prioritize the $18 put for bearish exposure and monitor the 200-day average ($17.51) as a critical psychological level. Watch for a 5% downside move to $17.61 to trigger key options payoffs.