Infosys Plunges 3.6% Amid Bullish Guidance and Analyst Upgrades: What's Fueling the Intraday Selloff?

Summary
• Infosys (INFY) trades at $18.66, down 3.57% from its previous close of $19.35
• ADRs surged 10% overnight following FY26 revenue guidance upgrade to 3-3.5%
• Analysts at Jefferies, Nomura, and TD Cowen raise price targets despite mixed Q3 earnings

Infosys faces a sharp intraday selloff despite upgraded fiscal year 2026 revenue guidance and a wave of analyst upgrades. The stock trades below its 52-week high of $30 but above its 52-week low of $15.815, with technical indicators showing a short-term bullish trend amid long-term consolidation. The selloff occurs against a backdrop of cautious client spending in the IT sector and mixed quarterly results.

Profit-Taking and Market Skepticism Weigh on INFY Despite Optimistic Outlook
The intraday selloff reflects profit-taking after Infosys' ADRs surged 10% overnight following the guidance upgrade. While the company raised FY26 constant-currency revenue growth to 3-3.5%—a 75-basis-point increase—its Q3 results showed a 2% year-on-year decline in consolidated net profit. Analysts at Antique and TD Cowen highlight muted Q4 growth expectations despite improved long-term prospects. The stock's decline also coincides with broader market caution toward IT services firms facing margin pressures from regulatory costs and wage inflation.

IT Sector Volatility Amid Mixed Earnings as Infosys Trails Peers
The IT services sector remains under pressure as large-cap firms like IBM (-0.4%) show resilience despite macroeconomic headwinds. Infosys' selloff contrasts with IBM's stable performance, suggesting investor skepticism about near-term execution risks for Indian IT firms. While Infosys' guidance upgrade outperforms sector expectations, its mixed Q3 results and margin pressures create divergence from sector leaders prioritizing disciplined cost management.

Options Playbook: Capitalizing on INFY's Volatility with Strategic Leverage
• Technical Indicators: RSI at 57.7 (neutral), MACD -0.0198 (bearish crossover), Bollinger Bands (19.74/18.38/17.02)
• Key Levels: 200-day MA at $17.49, 30-day MA at $18.20, and 200D support at $18.18

Infosys' price action suggests a short-term bearish bias with long-term consolidation. The stock trades below its 200-day moving average but above critical support at $17.02. Options traders can exploit elevated volatility through leveraged positions. Two top options from the chain:

• INFY20260220P18 (Put):
- Strike: $18, Expiry: 2026-02-20
- IV: 39.81% (moderate), Leverage: 29.57%, Delta: -0.3629 (mid-range), Theta: -0.0081 (slow decay), Gamma: 0.1586 (high sensitivity)
- Payoff: At 5% downside (ST = $17.73), payoff = max(0, $18 - $17.73) = $0.27/share
- This put offers asymmetric upside with high gamma to benefit from price swings.

• INFY20260220C19 (Call):
- Strike: $19, Expiry: 2026-02-20
- IV: 38.16% (moderate), Leverage: 24.84%, Delta: 0.4642 (mid-range), Theta: -0.0152 (moderate decay), Gamma: 0.1751 (high sensitivity)
- Payoff: At 5% downside (ST = $17.73), payoff = max(0, $17.73 - $19) = $0
- This call provides directional exposure with high gamma to capitalize on rebounds.

Aggressive bulls may consider INFY20260220C19 into a bounce above $18.38 (middle Bollinger Band), while bears should monitor the 200-day MA at $17.49 as a critical support level.

Backtest Infosys Stock Performance
The backtest of Infosys (INFY) after an intraday plunge of -4% from 2022 to the present shows mixed short-term performance but a slight positive return over the longest 30-day period. The 3-day win rate is 49.80%, the 10-day win rate is 50.00%, and the 30-day win rate is 49.21%. The average returns over these periods are slightly negative, with a -0.07% return over 3 days, a -0.26% return over 10 days, and a -0.42% return over 30 days. The maximum return during the backtest was 0.04%, which occurred on the 30th day after the plunge.

INFY at Crossroads: Volatility Presents Strategic Entry Points
Infosys' intraday selloff reflects short-term profit-taking but leaves long-term fundamentals intact. With a 3.5% guidance upgrade and a $18.38 mid-Bollinger Band as a near-term pivot point, the stock offers strategic options for both directional and volatility-driven plays. Sector leader IBM's -0.4% move underscores IT sector resilience, but Infosys' AI-driven growth narrative and improved deal pipeline position it for a rebound. Watch for a breakdown below $17.02 or a breakout above $19.74 to confirm trend direction.