Why NYSE Stopped Trading In Infosys ADRs After 56% Jump? All About Short Squeeze & What Infosys Clarifies

A great phenomenon emerged in Infosys' American depositary receipts (ADR) a day ago, which forced NYSE to halt trading in the ADR twice during the session. This phenomenon is called a 'short squeeze,' which a layman investor will probably be clueless about; however, it's a must to understand for clarity and to ease panic. A lot of forces were involved on December 19 to fuel Infosys ADR to its highest level of $30 apiece on the NYSE, fueling more than a 56% jump in a single day. Among these factors, Infosys has ruled out any material events for disclosure as the reason.

Infosys ADRs:

On December 19, Infosys ADR skyrocketed by at least 56.41% to hit an all-time high of $30 apiece on the NYSE.

After a roller coaster of events, Infosys ADR finally ended at $20.22 apiece, up by 5.4% from their previous close of $19.18 apiece.

Infosys Clarification On ADR Spike:

In its regulatory filing on Saturday, Infosys said, "The Company has observed volatility in the price of its American Depositary Receipt ("ADR") on the New York Stock Exchange ("NYSE") on December 19, 2025, which resulted in two Volatility Trading Pauses ("Limit Up-Limit Down"/"LULD") being triggered by NYSE."

It added, "In this regard, the Company hereby clarifies that there are no material events that require disclosure under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Regulations")."

Why NYSE Halted Trading In Infosys ADR?

The extreme and gobsmacking surge in Infosys ADR triggered NYSE's Limit Up-Limit Down (LULD) mechanism.

The LULD rule has been in place for more than decades on Wall Street. The SEC launched the rule to protect investors from unexplained surges in listed securities. The rule focuses in ensuring the price of individual securities are following their fundamental prices depending upon their demand and supply, which means they do not move beyond their established parameters.

But if these listed securities price level go beyond and unexplainably above their fundamental prices, NYSE has the right to halt trading in those securities.

According to NYSE website, LULD halts have been a permanent feature of US equities market since 2019 and provide a particularly useful tool to analyze an exchange's volatility dampening mechanisms. Put simply, LULD halts are triggered on a stock-by-stock basis if price volatility breaches a pre-defined threshold. Once triggered, LULD halts remain in effect for a minimum of five minutes and until the Primary Listing Exchange can re-open trading in that security. During a LULD halt, all trading in the halted stock - across all trading venues - is suspended.

So this is why NYSE halted trading in Infosys ADR.

But then comes the question why did Infosys ADR even shoot up beyond its identified threshold?

Why Infosys ADR Jumped By 56%?

As per reports, the answer lies in a trading practice called 'short squeeze'. Various reports that Infosys ADRs rally was due to a large institutional stock lender who recalled a substantial volume of their lent shares.

The recall reportedly led to decline in supply of Infosys ADRs in the lending market. The next chain of impact is short sellers were caught off-guard and forced to cover their positions in a scenario where ADR's availability was low due to the imbalance in supply-demand.

Its the classic old tale, when the demand is high but supply is low, the prices surge. And when the demand is low and supply is high, the prices fall!

What Is Short Squeeze In Trading?

According to Bank Rate explainer, a short squeeze occurs when a stock moves higher and short sellers decide to cover their short positions or are forced to do so via margin calls. As these short sellers buy the stock, the price rises, potentially creating a situation in which more shorts have to cover. This sends the stock soaring even further in a vicious cycle. In theory, there's no limit to how far a stock can rise.

Accenture Results:

It needs to be noted that Indian tech stocks in general terms were trading higher on December after leading tech player Accenture reported better-than-expected Q1 earnings despite keeping their growth guidance unchanged. The earnings of Accenture hinted at stable growth for Indian IT companies, which led investors to buy more. Since Infosys ADR is part of Infosys, it too saw its effect.

After the closing bell on December 19, Infosys share price surged by 0.8% to end at Rs 1639.60 apiece on BSE, with a market cap of Rs 6,81,192.22 crore.

In the first quarter of fiscal 2026, Accenture posted 6% YoY growth in revenue to $18.7 billion, while new bookings surged by 12% YoY in dollar terms to $20.9 billion. The company continues to expect full-year revenue growth to be 2% to 5% in local currency. Excluding an estimated 1% impact from its U.S. federal business, company continues to expect revenue growth to be
3% to 6% in local currency.