Infosys ADR Anomaly: What Caused the 56% Spike and Trading Halts?

Introduction

Infosys Ltd. became the center of market attention on Friday, December 19, 2025, after its American Depositary Receipts (ADRs) listed on the New York Stock Exchange (NYSE) experienced an extraordinary and abrupt surge. The stock price skyrocketed by as much as 56%, triggering two separate trading halts due to extreme volatility. In response to the unusual activity, the Bengaluru-based IT giant issued a formal clarification, stating that there were no undisclosed material developments that would justify such a sharp price movement. The incident has raised questions among investors and analysts, with market participants pointing towards technical factors rather than a shift in the company's fundamentals.

A Day of Unprecedented Volatility

Shortly after the opening bell on the NYSE, Infosys ADRs began a rapid ascent. The price surged from its previous close, climbing as much as 56% to hit a new 52-week high of $30. The sheer velocity of the price change prompted the NYSE to activate its 'Limit Up-Limit Down' (LULD) mechanism, a measure designed to curb excessive volatility and prevent disorderly trading. This resulted in two separate pauses in the trading of Infosys ADRs. The trading volume during the peak of the rally reached approximately 3.3 million shares, a significant figure that highlighted the intense but brief buying pressure. The Relative Strength Index (RSI), a momentum indicator, climbed to 85, signaling an unusually overbought condition.

Infosys Issues a Swift Clarification

In the interest of transparency and to quell market speculation, Infosys released a regulatory filing on Saturday, December 20, 2025. The company formally addressed the price volatility observed in its ADRs. The statement confirmed the two trading pauses and explicitly stated, "there are no material events that require disclosure under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015." Infosys emphasized that the communication was intended to prevent unwarranted speculation and reaffirmed its commitment to adhering to its disclosure obligations. This official response effectively disconnected the price surge from any operational or financial news related to the company.

The Short Squeeze Theory

One of the leading explanations for the sudden spike is a potential short squeeze. Market analysts and traders suggested that a major lender may have recalled a substantial number of Infosys ADRs that had been lent out to short sellers. Reports indicated that between 45 to 50 million shares were recalled, a figure that dwarfs the typical daily trading volume of 7 to 8 million shares. A short squeeze occurs when investors who have bet against a stock (by shorting it) are forced to buy it back to cover their positions. In a thinly traded market, such a large-scale recall would have created a massive imbalance between demand and supply, forcing short sellers to buy shares at progressively higher prices and dramatically accelerating the rally.

A Technical Glitch in the System?

Another compelling theory points to a technical data error. According to a report from The Chronicle Journal, several financial data platforms had incorrectly linked the 'INFY' ticker symbol to an unrelated security named 'American Noble Gas Inc.' While the company name was wrong, the financial data, news, and market capitalization attached to the ticker still belonged to Infosys. This mismatch could have confused algorithmic trading systems, which might have interpreted the data as a significant pricing anomaly. These automated systems could have triggered aggressive buy orders, adding significant fuel to the rally, especially in a low-liquidity environment.

| Key Metrics of the Infosys ADR Event (Dec 19, 2025) | | :--- | :--- | | Peak ADR Price Surge | Up to 56% | | New 52-Week High | $30 | | Trading Halts Triggered | 2 (via LULD mechanism) | | Peak Trading Volume | Approximately 3.3 million shares | | Infosys NSE Share Price Close | ₹1,638.70 (+0.74%) |

Broader Market and Sector Context

The incident occurred against a generally positive backdrop for the IT services sector. A day earlier, global IT consulting giant Accenture reported better-than-expected first-quarter results for fiscal year 2026. Accenture's performance, particularly its strong bookings in AI, is often viewed as a bellwether for the health of the Indian IT industry. This positive sentiment may have contributed to a receptive market environment, although it does not explain the extreme magnitude of the Infosys ADR surge. Wipro's ADRs also saw a notable increase of over 7% on the same day, suggesting some broader positive momentum, but its movement was far more controlled compared to the anomaly seen in Infosys.

Market Impact and Conclusion

Despite the dramatic events on the NYSE, the impact on Infosys's domestic shares was muted. The stock closed just 0.74% higher at ₹1,638.70 on the National Stock Exchange. After the volatility, the Infosys ADRs retreated from their intraday high of $30, eventually settling at$20.22. The episode serves as a stark reminder of how modern markets can be influenced by technical factors, automated trading, and data integrity, especially during periods of low liquidity. The consensus among analysts is that the surge was a technical event, driven by a combination of a short squeeze and a data glitch, rather than a reflection of Infosys's underlying business strength. The company's prompt clarification helped restore order and reinforced its commitment to transparent communication with investors.