US-traded shares of Infosys surged sharply on Friday — hitting a 52-week high of $30 and forcing the New York Stock Exchange to halt trading. The staggering 40% rise came mere minutes after the opening bell and briefly added tens of billions of dollars to its market capitalisation. Reports suggested that the chaos was driven by a short squeeze while others claimed a major lender had pulled back a massive chunk of shares. Indian IT giants also saw shares edge higher after Accenture posted better-than-expected quarterly results after Indian markets closed on Thursday.
A short squeeze occurs when the stock price rises sharply in a short period of time — forcing short sellers to buy it back at higher prices to cut their losses. Such investors bet on a price drop by borrowing and selling shares and create even more buying pressure in their urgent rush to repurchase shares. This creates a snowball effect as the stock faces massive new demand, tightening supply and signals for other shorts to execute similar covers.
Technical glitch?
According to a report by The Chronicle Journal, the surge was led by a technical glitch that saw multiple data providers mislabel the company ticker. Financial tracker platforms such as Zacks and MarketBeat accidentally tagged ‘INFY’ as ‘American Noble Gas Inc’ and left algorithms confused into buying aggressively — essentially fueling the price rise through automated buying in a low-liquidity holiday market.
The bizarre ticker mapping glitch had begun a few days earlier and left automated trading algorithms in disarray. The financial metrics and news headlines attached to the ticker had continued to reference details about Infosys (including its massive AI investments and $75 billion market cap). Systems designed to seek out ‘mispriced’ assets or sudden momentum shifts likely interpreted this discrepancy as a resounding signal to buy Infosys shares.
Trading error?
A separate theory has also been floated about human error in trading entry — with some suggesting that a major lender had recalled millions of Infosys ADR shares on Friday. This, in turn, would have forced short-sellers to cover their positions frantically in a low-liquidity market and sparked the squeeze. Traders told Moneycontrol that a major lender had recalled 45–50 million shares lent out into the market. The number would be a far cry from the typical Infosys ADR volumes of around seven to eight million shares.