Infosys Plunges 3% Amid AI Energy Crisis Hype – What’s Next?

Summary
• Infosys (INFY) drops 3.05% to $18.59, breaking below key support levels
• Intraday range of $18.55–$19.02 highlights volatile session
• News surge on AI energy infrastructure sparks sector rotation
• Options chain shows heavy put buying at $18 strike

Infosys faces a sharp intraday selloff amid a broader market shift toward energy infrastructure stocks tied to AI demand. The stock’s 3% decline reflects investor rotation into utilities and energy firms highlighted in recent AI-focused narratives. With the 52-week range of $15.82–$30 and a dynamic PE of 23.4, the sell-off raises questions about sector positioning and technical triggers.

AI Energy Infrastructure Narrative Sparks Sector Rotation
The selloff in Infosys aligns with a broader market shift toward energy infrastructure stocks, as AI-driven demand for power strains global grids. Recent news highlights a 'toll booth' operator in nuclear energy and LNG exports, which has gained traction among investors. While Infosys is an IT services leader, the market is pivoting toward utilities and energy firms positioned to profit from AI’s energy needs. This rotation is evident in the sector’s underperformance, with peers like Accenture and Wipro also down, signaling a strategic reallocation of capital.

IT Services Sector Weakness as Energy Plays Gain Momentum
The Information Technology Services sector, where Infosys operates, is under pressure as energy infrastructure stocks surge. Accenture (ACN) and Wipro (WIT) both trade lower, reflecting sector-wide caution. Meanwhile, energy-linked ETFs like CIBR and DGIN show resilience, indicating a thematic shift. Infosys’s 3% drop mirrors the sector’s decline, but energy-focused plays are outperforming, suggesting a structural repositioning in response to AI’s energy demands.

Options and ETFs to Hedge AI Energy Rotation Risk
• MACD: 0.524 (bullish divergence), Signal Line: 0.356, RSI: 65.6 (neutral)
• Bollinger Bands: Upper $19.48, Middle $17.99, Lower $16.50
• 200-day MA: $17.51 (below current price)
• Key Support: $17.72–$17.79, Resistance: $16.99–$17.08

Infosys’s technicals suggest a bearish near-term bias, with RSI hovering near neutral and MACD showing weakening momentum. The 200-day MA at $17.51 acts as a critical level; a break below $17.72 could trigger further declines. For hedging, consider boldINFY20260116P18 (put option) and boldINFY20260116C19 (call option).

INFY20260116P18 (Put, $18 strike, 1/16/2026):
• IV: 50.40% (moderate)
• Delta: -0.3718 (moderate sensitivity)
• Gamma: 0.1539 (high sensitivity to price moves)
• Turnover: 103,620 (liquid)
• Leverage: 27.36%
• Theta: -0.0127 (moderate time decay)
• Payoff at 5% downside: $0.21 (max profit if price drops to $17.66)
• This put offers strong protection against a near-term breakdown, with high gamma amplifying gains if the stock accelerates lower.

INFY20260116C19 (Call, $19 strike, 1/16/2026):
• IV: 42.03% (moderate)
• Delta: 0.4493 (moderate sensitivity)
• Gamma: 0.1931 (high sensitivity)
• Turnover: 27,704 (liquid)
• Leverage: 28.62%
• Theta: -0.0207 (high time decay)
• Payoff at 5% downside: $0.00 (no profit if price drops to $17.66)
• This call is speculative but offers upside if the stock rebounds above $19, leveraging high gamma for rapid gains on a reversal.

For ETF exposure, boldDGIN (VanEck Digital India ETF, -0.41%) and boldGLIN (VanEck India Growth Leaders ETF, +0.62%) offer sector alignment. DGIN’s -0.41% decline mirrors IT Services weakness, while GLIN’s resilience hints at potential outperformance if AI energy narratives fade.

Backtest Infosys Stock Performance
The backtest of Infosys (INFY) after a -3% intraday plunge from 2022 to the present shows mixed results. While the short-term win rates are decent, the overall returns over 3, 10, and 30 days are negative, with the maximum return being only 0.04% over 30 days. This suggests that although there is some bounce in the stock, it hasn't led to significant gains, and the best performance is underwhelming.

Position for AI Energy Rotation – Act on Key Levels
Infosys’s 3% drop reflects a broader market shift toward energy infrastructure, with technicals and sector dynamics pointing to continued pressure. The 200-day MA at $17.51 and support at $17.72 are critical for near-term direction. Investors should monitor the boldACN (Accenture, -0.31%) as a sector leader and consider the put options highlighted for downside protection. If the stock breaks below $17.72, the boldINFY20260116P18 put offers a high-gamma hedge. Conversely, a rebound above $19 could validate a short-term bounce, but the broader AI energy narrative suggests caution. Watch for sector rotation signals and key level breaks to dictate next steps.