Infosys Surges 4.06% on AI Momentum and Regulatory Hurdles: A Bullish Setup Amid Sector Turbulence?

Summary
• Infosys (INFY) surges 4.06% intraday to $18.96, breaking above $19.11
• Trump’s $100K H-1B visa fee sparks sector-wide anxiety but AI-driven growth offsets fears
• Options chain shows INFY20260116C20 with 166.67% implied upside and INFY20260116P18 as top put

Infosys’ 4.06% intraday rally to $18.96 reflects a tug-of-war between regulatory headwinds and AI-driven optimism. The stock’s surge follows a Bloomberg report on Trump-era visa costs and a PR Newswire study on AI’s psychological safety impact. With a 52-week range of $15.81–$23.19 and a dynamic P/E of 23.86, INFY’s technicals and options activity suggest a pivotal short-term inflection.

H-1B Visa Fee Fears and AI Momentum Drive Infosys' Sharp Intraday Rally
Infosys’ 4.06% surge stems from a collision of macroeconomic anxiety and sector-specific optimism. The Trump administration’s proposed $100,000 H-1B visa fee, highlighted in Bloomberg and MT Newswires, threatens $1B in annual costs for Infosys, which relies on 93% foreign hires. However, a PR Newswire report on AI’s psychological safety impact—83% of leaders cite measurable gains—bolsters confidence in Infosys’ AI-first GCC model. Meanwhile, Q1 results (revenue $5.01B, EPS $0.20) and Microsoft’s AI partnership (50,000 Copilot licenses) reinforce growth narratives, overshadowing near-term regulatory risks.

IT Services Sector Mixed as IBM Slides 1.04% Amid Tech Earnings Jitters
The IT Services sector remains fragmented, with Infosys outperforming peers like IBM (-1.04%) and Wipro (up 1.04%). While Infosys benefits from AI-driven deal wins (67% net new in Q2 FY26), IBM’s earnings miss and Oracle’s AI infrastructure challenges weigh on broader tech sentiment. Infosys’ 23.86 P/E, below its 5-year average of 27.9x, suggests undervaluation relative to sector peers, despite Trump-era risks.

INFY20260116C20 and INFY20260116P18: High-Leverage Bets on AI-Driven Breakouts
• 200-day MA: $17.52 (below current price)
• RSI: 64.93 (neutral to overbought)
• MACD: 0.257 (bullish divergence)
• Bollinger Bands: $17.02–$18.32 (current price at upper band)

Infosys’ technicals suggest a short-term bullish setup. The stock is testing its 52-week high ($23.19) and has a 4.06% intraday gain on 0.44% turnover. Two options stand out: INFY20260116C20 (strike $20, 166.67% implied upside) and INFY20260116P18 (strike $18, -20% implied downside).

INFY20260116C20
• Code: INFY20260116C20
• Type: Call
• Strike: $20
• Expiry: 2026-01-16
• IV: 33.86% (moderate)
• LVR: 54.16% (high leverage)
• Delta: 0.311 (moderate sensitivity)
• Theta: -0.0134 (moderate time decay)
• Gamma: 0.1918 (high sensitivity to price moves)
• Turnover: $127,577
• Payoff (5% up): $0.98 per contract
• This call offers high leverage and gamma, ideal for a breakout above $19.11.

INFY20260116P18
• Code: INFY20260116P18
• Type: Put
• Strike: $18
• Expiry: 2026-01-16
• IV: 45.08% (moderate)
• LVR: 35.10% (moderate leverage)
• Delta: -0.317 (moderate sensitivity)
• Theta: -0.0107 (moderate time decay)
• Gamma: 0.1452 (moderate sensitivity)
• Turnover: $1,314,583
• Payoff (5% up): $0.98 per contract
• This put provides downside protection if the $18.21 support fails.

Aggressive bulls should buy INFY20260116C20 into a break above $19.11. Cautious traders may hedge with INFY20260116P18.

Backtest Infosys Stock Performance
The backtest of Infosys (INFY) following a 4% intraday surge from 2022 to the present shows poor performance. The strategy yielded a -27.20% return, underperforming the benchmark by 75.26%. With a maximum drawdown of 0.00% and a Sharpe ratio of -0.29, the strategy had a high volatility of 26.80%, indicating significant risk and losses.

Bullish Setup Confirmed: Buy INFY20260116C20 for 166.67% Upside if $19.11 Breakout Holds
Infosys’ 4.06% rally is a short-term bullish signal, driven by AI momentum and a resilient Q1 performance. The stock’s 52-week high ($23.19) and 23.86 P/E suggest undervaluation, while the options chain highlights INFY20260116C20 as a high-leverage play. Watch for a $19.11 breakout to confirm the trend. Sector leader IBM’s -1.04% decline underscores tech sector volatility, but Infosys’ AI-driven growth narrative remains intact. Aggressive bulls should buy INFY20260116C20 into a break above $19.11.