Infosys’ American Depositary Receipts (ADRs) witnessed an extraordinary rally, soaring nearly 40 percent in a single session, after a powerful short squeeze forced traders to rush for cover. The sharp spike was so intense that it triggered a temporary trading halt, highlighting severe liquidity stress in the ADR market.
What triggered the Infosys ADR short squeeze?
Market participants pointed to an unusually large stock lending recall, which reportedly far exceeded the average daily trading volumes of Infosys ADRs. As lenders demanded shares back, short sellers were left scrambling to buy ADRs in a thinly traded market, leading to a rapid price escalation.
With limited supply available, the imbalance between demand and liquidity resulted in frantic short-covering, amplifying the upside move within a very short span of time.
Thin liquidity magnified the rally
Infosys ADRs typically see lower volumes compared to their India-listed counterparts. This thin liquidity made the stock especially vulnerable to a squeeze once recalls surged. As buy orders overwhelmed the market, prices jumped sharply, prompting exchange safeguards and a brief halt in trading.
Key takeaway
The sudden spike in Infosys ADRs underscores the risks associated with crowded short positions, especially in low-liquidity instruments. While the move was largely technical in nature, driven by positioning rather than fundamentals, it serves as a reminder of how quickly prices can move when supply dries up.
Keywords: Infosys ADR, Infosys short squeeze, Infosys ADR trading halt, Infosys stock news, ADR short covering, US-listed Infosys shares, Infosys market update
