Infosys Plummets 5.3% as Legal Storms and Market Sentiment Collide – What’s Next for INFY?

Summary
• Infosys (INFY) slumps 5.3% to $19.14, hitting an intraday low of $18.78
• Legal update on lawsuits involving Infosys McCamish Systems LLC triggers investor caution
• RSI surges to 80.17, signaling overbought conditions amid volatile price action

Infosys faces a sharp intraday selloff amid a critical legal filing and mixed market sentiment. The stock’s 5.3% drop to $19.14 reflects heightened uncertainty, with the 52-week range of $15.815–$30 providing a broader context. Analysts and traders are now scrutinizing the legal developments and technical indicators to gauge the next move.

Legal Update Sparks Investor Frenzy
The selloff is directly tied to Infosys’ recent Form 6-K filing, which disclosed an update on lawsuits against its subsidiary, Infosys McCamish Systems LLC. While the filing lacks granular details, the mere mention of ongoing litigation has triggered a flight to safety. Investors are interpreting the legal uncertainty as a potential drag on earnings and operational stability, especially with the stock already trading near its 52-week low. The absence of concrete resolution in the filing has amplified short-term volatility, as traders price in worst-case scenarios.

Tech Services Sector Suffers as INFY Drags Down Peers
The Information Technology Services sector, led by Accenture (ACN) at -0.54%, mirrors INFY’s bearish momentum. While ACN’s decline is modest, INFY’s 5.3% drop underscores its role as a sector laggard. The sector’s sensitivity to legal and regulatory risks is evident, with INFY’s litigation update amplifying broader concerns about operational resilience in the tech services space.

Options Playbook: Capitalizing on INFY’s Volatility with Strategic Contracts
• RSI: 80.17 (overbought)
• MACD: 0.497 (bullish), Signal Line: 0.315, Histogram: 0.183 (declining)
• Bollinger Bands: Upper $19.31, Middle $17.92, Lower $16.53
• 200D MA: $17.52 (below current price)
• Support/Resistance: 30D $17.76–$17.84, 200D $16.99–$17.08

INFY’s technical profile suggests a short-term overbought condition, with the RSI near 80 and MACD diverging. The stock is trading above its 200-day average but remains anchored by the 52-week low. Traders should monitor the $18.78 intraday low as a critical support level. The options chain offers two high-conviction plays:

1. INFY20260116P18 (Put):
• Strike: $18, Expiry: 2026-01-16
• IV: 57.83% (moderate), Leverage: 29.45%, Delta: -0.313, Theta: -0.0149, Gamma: 0.1198, Turnover: 82,010
• Overbought RSI, moderate IV, and high gamma make this put ideal for a bearish breakout. A 5% downside to $18.13 would yield a payoff of $0.13 per share.

2. INFY20260116C19 (Call):
• Strike: $19, Expiry: 2026-01-16
• IV: 39.14% (reasonable), Leverage: 21.76%, Delta: 0.554, Theta: -0.0211, Gamma: 0.1973, Turnover: 598,160
• High gamma and liquidity position this call for a rebound above $19.80. A 5% upside to $20.09 would yield a $1.09 payoff.

Aggressive bulls may consider INFY20260116C19 into a bounce above $19.80, while bears should watch the $18.78 level for a potential breakdown.

Backtest Infosys Stock Performance
The backtest of Infosys (INFY) after a -5% intraday plunge from 2022 to the present shows mixed results. While the stock experienced a maximum return of 0.05% over 30 days, the overall trend was negative, with a 30-day return of -0.26% and a 10-day return of -0.19%. The 3-day win rate was 51.02%, indicating some short-term volatility.

INFY at Crossroads: Legal Uncertainty and Technical Signals Point to Critical Juncture
The selloff in INFY reflects a confluence of legal uncertainty and overbought technical conditions. While the stock’s 5.3% drop has brought it closer to key support levels, the unresolved litigation remains a wildcard. Traders should prioritize monitoring the $18.78 intraday low and the 200-day average of $17.52. Meanwhile, the sector leader Accenture (ACN) at -0.54% highlights the broader fragility in tech services. Watch for a breakdown below $18.78 or a legal resolution to unlock clarity.