Infosys ADR's 56% Surge: Why NYSE Halted Trading Twice

An Unprecedented Day for Infosys on Wall Street

On December 19, 2025, the American Depositary Receipts (ADRs) of Infosys experienced extraordinary volatility on the New York Stock Exchange (NYSE). The stock surged by as much as 56.4%, reaching an all-time high of $30 per share shortly after the market opened. This dramatic and unexpected price movement prompted the NYSE to halt trading in Infosys ADRs not once, but twice during the session. The event left investors and market analysts searching for explanations, especially since the company's fundamentals did not appear to justify such a rally. By the end of the tumultuous day, the ADRs retreated from their peak, closing at$20.22, a more modest but still significant gain of 5.4% from the previous day's close. The chaos was largely confined to the US market, as Infosys shares on Indian exchanges saw only a minor uptick.

Infosys Issues a Swift Clarification

In response to the unusual trading activity, Infosys moved quickly to address the situation and curb market speculation. In a regulatory filing on Saturday, December 20, the Bengaluru-based IT giant confirmed the volatility and the resulting trading pauses. The company stated clearly, "There are no material events that require disclosure under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015." This official communication was crucial as it ruled out any undisclosed corporate development, such as a major contract win or a merger announcement, as the cause of the surge. The statement aimed to bring transparency and reassure investors that the company's business operations remained stable and that the price action was disconnected from its performance.

Understanding the NYSE Trading Halts

The decision by the NYSE to suspend trading was not arbitrary but a standard procedure designed to protect markets and investors from extreme volatility. The exchange activated its Limit Up-Limit Down (LULD) mechanism, a rule established by the SEC to prevent disorderly trading. The LULD system creates price bands for individual securities, and if a stock's price moves outside this pre-defined range too quickly, trading is automatically paused. This halt, which typically lasts for a minimum of five minutes, provides a cooling-off period, allowing market participants to assess the situation and for information to be disseminated evenly. In the case of Infosys, the rapid 56% ascent breached these volatility thresholds, triggering the protective halts.

The Leading Theory: A Powerful Short Squeeze

Market consensus quickly pointed to a 'short squeeze' as the primary driver behind the rally. A short squeeze occurs when investors who have bet against a stock (by short-selling it) are forced to buy it back to cover their positions. This sudden wave of buying pressure drives the price up even further, creating a vicious cycle. Reports suggest that a large institutional stock lender recalled a substantial volume of their lent Infosys ADRs. This recall drastically reduced the supply of available shares in the lending market. Short sellers, caught off-guard, had to scramble to buy back shares in a market with thin liquidity and low supply, causing the price to skyrocket. This classic supply-demand imbalance appears to be the most plausible explanation for the extreme price movement.

Technical Glitches and Algorithmic Trading

While the short squeeze theory is widely accepted, another contributing factor may have been a technical error. Some reports indicated a ticker-mapping glitch across several financial data platforms in the days leading up to the event. The 'INFY' ticker was allegedly linked incorrectly to an unrelated security. Automated trading systems, or algorithms, may have interpreted this data mismatch as a pricing anomaly or a momentum signal. In a thinly traded, pre-holiday market, these aggressive algorithmic buy orders could have amplified the initial upward movement, pouring fuel on the fire started by the short squeeze until the exchange's circuit breakers kicked in.

Market Context and Sector Sentiment

The unusual trading in Infosys ADRs occurred against a generally positive backdrop for the IT sector. Accenture, a global competitor, had reported better-than-expected Q1 earnings, which lifted sentiment for Indian IT companies. This positive news likely contributed to some buying interest in Infosys and other tech stocks. For instance, Wipro's ADRs also saw a gain of over 7% on the same day. However, this sector-wide optimism alone cannot account for the sheer magnitude of the 56% spike in Infosys ADRs, reinforcing the view that market-specific mechanics were the dominant cause.

Key Data from the Trading Session

To understand the scale of the event, it's helpful to look at the key numbers from the December 19 trading session.

Analysis for Investors

The dramatic surge in Infosys ADRs serves as a powerful reminder that stock prices can sometimes become detached from underlying business fundamentals due to market mechanics. For long-term investors, the event was likely more noise than signal. The company's clarification that there were no material developments is the most important takeaway. The incident highlights the inherent risks of short selling, the growing influence of algorithmic trading, and how low liquidity can exacerbate volatility. The focus for investors should remain on Infosys's core performance, including its revenue growth, operating margins, and deal pipeline, which were unaffected by the one-day trading frenzy.

Conclusion: A Return to Fundamentals

The wild ride of Infosys ADRs on December 19 was a result of a perfect storm: a massive short squeeze likely amplified by a technical glitch in a low-liquidity environment. While the event will be remembered as a case study in market volatility, Infosys has confirmed its business operations are proceeding as normal. With the dust settled, the market's attention will now shift back to the company's fundamental drivers. The next major catalyst will be the release of its Q3 FY26 financial results, which will provide a clear picture of its business health and future outlook.