Infosys (INFY) Surges 6.96% on Earnings Optimism and Strategic Clarity – Can This Momentum Sustain?

Summary
• Infosys (INFY) surges 6.96% intraday, trading at $18.7401 amid raised revenue guidance and CEO clarification on US workforce issues.
• Q3 revenue of $5.1 billion beats estimates by 0.33%, with utilization rates stabilizing despite workforce challenges.
• CEO Salil Parekh denies recent ICE-related employee detentions, calming investor concerns.
• Stock outperforms the S&P 500, which gained 2.1% over the past month, despite a Zacks Rank 3 (Hold) rating.

Infosys’ sharp intraday rally reflects a confluence of earnings optimism and strategic clarity. The company’s Q3 results, coupled with CEO Parekh’s denial of recent ICE-related claims, have reignited investor confidence. With the stock trading near its 52-week high of $30, the focus now shifts to whether this momentum can translate into sustained growth.

Earnings Beat and Strategic Clarity Drive INFY's Rally
Infosys’ 6.96% intraday surge is fueled by a combination of Q3 earnings outperformance and CEO Salil Parekh’s clarification on US workforce deployment. The company reported $5.1 billion in revenue, exceeding the Zacks Consensus Estimate by 0.33%, while EPS of $0.21 matched expectations. Parekh’s denial of recent ICE-related employee detentions—reiterating that only one employee was denied entry months ago—quelled market fears. Additionally, the raised revenue guidance and emphasis on AI-driven growth through Infosys Topaz underscored long-term strategic confidence, attracting both institutional and retail buyers.

Options Picks and Technicals: Capitalizing on INFY's Volatility
• 200-day average: 17.48 (below current price); RSI: 28.65 (oversold); MACD: -0.0105 (bearish divergence)
• Bollinger Bands: Upper at $19.61, Middle at $18.30, Lower at $16.99 (price near upper band)
• Key support/resistance: 200D support at $18.18–$18.27; 30D resistance at $17.75–$17.80

INFY’s technicals suggest a short-term bullish bias, with RSI in oversold territory and price near the upper Bollinger Band. The 200-day average lags behind the current price, indicating potential for a continuation of the rally. Two top options from the chain stand out:

• INFY20260220C19 (Call, $19 strike, 2026-02-20):
- IV: 37.37% (moderate)
- Leverage ratio: 22.18%
- Delta: 0.502 (moderate sensitivity)
- Theta: -0.0146 (moderate time decay)
- Gamma: 0.175 (high sensitivity to price changes)
- Turnover: 473,747 (high liquidity)
- Payoff (5% upside): $0.935 per contract (max(0, 19.677 - 19)).
This call option offers a balanced risk-reward profile, with high gamma amplifying gains if the stock breaks above $19.61.

• INFY20260220P18 (Put, $18 strike, 2026-02-20):
- IV: 41.40% (moderate)
- Leverage ratio: 31.43%
- Delta: -0.334 (moderate bearish exposure)
- Theta: -0.0089 (low time decay)
- Gamma: 0.144 (moderate sensitivity)
- Turnover: 9,466 (high liquidity)
- Payoff (5% upside): $0.677 per contract (max(0, 18 - 19.677 = 0)).
While the put option is less profitable in a bullish scenario, its high gamma and liquidity make it a hedge against volatility.

Trading View: Aggressive bulls should target INFY20260220C19 into a break above $19.61. If $18.20 support holds, the rally could extend toward the 52-week high of $30.

Backtest Infosys Stock Performance
Infosys (INFY) has demonstrated robust performance following a 7% intraday surge from 2022 to the present. Here's a detailed analysis:1. Dividend Increase and Yield: Infosys declared an interim dividend of $0.21 per ADS in 2022, which, when added to the annual dividend, resulted in a total annual dividend of $0.41 per ADS. This represents a 14.8% increase over the previous fiscal year, indicating a consistent commitment to returning value to shareholders.2. Revenue Growth and Profitability: The company's consolidated revenues showed a significant jump of 7.7% sequentially, reaching Rs 31,867 crore during the period. Infosys also increased its FY22 revenue guidance to 19.5%-20.0%, up from the earlier 16.5%-17.5%, reflecting confidence in its growth prospects. Although the operating margin remained stable at 23.5%, net profits experienced a healthy increase of 7.2%.3. Strategic Expansion: Infosys' strategic expansion into Latin America, such as hiring 400 skilled workers in Costa Rica, is expected to bolster regional business growth. This move aligns with the company's goal of navigating digital transformations for large enterprises, which is likely to drive future revenue growth.4. Market Position and Outlook: Infosys' position as a global leader in next-generation digital services and consulting, coupled with a strong deal pipeline and healthy technology spends by large enterprises, suggests a favorable market outlook.In conclusion, Infosys' performance following the 7% intraday surge from 2022 to now has been impressive, driven by dividend growth, revenue increases, strategic expansions, and a strong market position. These factors collectively contribute to a positive outlook for the company.

Bullish Momentum Intact – Key Levels to Watch for INFY
Infosys’ 6.96% intraday surge is underpinned by earnings strength and strategic clarity, with technicals favoring a continuation of the rally. The 200-day average at $17.48 and RSI in oversold territory suggest further upside potential. Investors should monitor the $19.61 upper Bollinger Band and $18.20 support level. Meanwhile, sector leader IBM (IBM) remains flat with a 0.18% intraday gain, highlighting INFY’s outperformance. Aggressive bulls may consider INFY20260220C19 for leveraged exposure, while hedging with INFY20260220P18. Watch for a breakdown below $18.20 to trigger a reevaluation of the bullish case.