On hopes of a further surge in the Infosys ADR, the stock opened on the upper circuit at Rs 5,960 at the Bombay Stock Exchange, before news spread in the market that the ADR had lost $19 to end at $91.25. This translates into a fall of Rs 1,645 per share. The domestic stock immediately reacted and nosedived to Rs 5320. It later hit the lower end of the circuit filter at Rs 5077 before closing slightly higher at Rs 5082 against Monday's close of Rs 5519. Intra-day, the stock lost close to 15 per cent or Rs 883. There were only sellers on the National Stock Exchange at a price of Rs 5065.

``Those investors who went long at the price of Rs5960 are believed to have been trapped. If an investor has taken a large position at this price and the scrip fails to rally to 5900-levels, it will lead to a payment problem,'' said a market participant. ``An operator, who was long on even 100 shares, could land in trouble since the intra-day fall was very sharp,'' added a broker.

Market sources point out that a lot depends on how the ADR prices move on Tuesday after they opened weak in initial trade. On Friday, the ADR had hit an intra-day high of $121.87 before it retreated to close at $110.75 with a record volume of 4.43 lakh ADRs. This led to a gap of Rs 4670 between the ADR and domestic prices. Market players had been speculating that Infosys will continue to rally from the Rs 5500-levels (Monday's close) bridging the gap. Ironically, with Monday's fall in the domestic and the ADR prices, the gap has narrowed to Rs 2811.

Rumours continued to haunt the Infosys counter during the day. ``Some short-sellers got trapped in the ADR while the pricerallied. These players are believed to have covered their poistions and as a result, the price has fallen. A second rumour was that some investors entered the ADR under the impression that one ADR equalled one share and bought heavily, leading to a price spurt. Having now realised that two ADRs make one share, they have offloaded,'' said a market source. The volumes on Monday, when the ADR slumped to $91.25 were to the tune of 3.57 lakh.

However, there is still some more fodder for bulls. The market is agog with rumours that Infosys is very close to acquring a company in the USA. ``The deal is likely to be finalised in a month. They are looking at a player which has two-three visible products with a strong marketing network in the States,'' said a portfolio manager. The target is likely to be bought through stock swap, which will not result in any cash-outflow. ``The higher the ADR price, the better it is since the stake given to the target company in Infosys will be lower,'' he added. Analysts point outthat valuation is being built into the stock since Infosys is sitting pretty with surplus cash of Rs 400 crore.