On December 19, something happened in the New York Stock Exchange that surprised investors all over the world. A sudden jump of more than 38 percent was seen in the American Depository Receipt of Indian IT giant Infosys and the share price crossed $27. The surge was so unusual and rapid that the exchange had to halt trading for some time to manage the situation. The most shocking thing was that on the same day when this chaos broke out in the American market, Infosys shares in India had closed with only a slight gain.
The story behind this sudden disturbance in New York
This huge increase in Infosys’s ADR is directly related to global IT sector Is related to the sentiment of. In fact, the first quarter results of American IT company Accenture have been better than expected. Accenture’s performance gave US investors confidence that tech spending could return to stability in the coming times. Major business of Infosys comes from North America, hence the investors there considered this news very positive for Infosys also. Amidst this positive environment, the upward trend in ADR started from 17th December itself, which reached its peak on 19th December.
Short squeeze and shortage of shares spoiled the mathematics
According to market reports and experts, a major reason for this explosion in Infosys’ ADR was the sudden shortage of shares in the market. A large bank recalled the shares it had lent to short sellers in the market. When the bank suddenly asked for these shares back, there was panic among the traders who had bet on the shares falling. To protect their short positions and reduce losses, these traders started buying shares from the market at higher prices. This situation of increasing demand and decreasing supply is called ‘short squeeze’ in market language. Because of this, prices rocketed in no time and the New York Stock Exchange had to use a circuit breaker.
Its meaning for Indian investors
Even though Infosys shares were skyrocketing in New York, the picture was quite different on the National Stock Exchange in India. On December 19, Infosys had closed at Rs 1,638 in the domestic market with a gain of only 0.7 percent. However, ADRs of other Indian IT stocks like Wipro have also seen a rise, indicating that the outlook towards Indian companies is improving globally. Experts say that even though the Nifty IT index may have improved in the last one month, it is still quite low in the year 2025. Therefore, seeing this movement in the US market, it is very important to keep an eye on the domestic quarterly results and global order pipeline before taking any investment decision.
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Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.
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