📰What on Earth Happened to Infosys? | Daily India Briefing

On Friday, Infosys shares on the New York Stock Exchange skyrocketed 56 percent on Friday, but the same company’s shares on the Indian stock exchange barely budged. What happened?

If you have any questions about India, fill out this form or reach out to Shreyas at [email protected]

Macro

• India signs its third free trade agreement of the year, now with New Zealand. The deal cuts 95 percent of NZ duties but does not open India’s dairy market for imports. Commerce Minister Goyal said the dairy market is not being explored for any trade pacts. The countries expect to double their $1.3 billion (₹116.5 billion) of bilateral trade in 5 years, plus New Zealand will invest $20 billion (₹1.8 trillion) in India.

• New Zealand beats out the US for exporting fruit to India, a 10 percent y-o-y $5 billion (₹448 billion) market. While small, India’s consumption of imported fruits keeps rising, which will certainly peeve American trade negotiators who have tried for fruit for years. 

• RBI cuts rates, but expects inflation to start rebounding next year. Current price pressures for both headline and core are low; other members also brought up geopolitical risks restricting growth. The RBI is also going to slow bond purchases from the market. 

• Bond yields have climbed to 9-month highs at 6.68 percent due to lowered rate cut views. Despite a recent rate cut by the RBI, disappointing meeting minutes and thin volume during the holiday season have led to investor sell-off. State governments also announced $3.7 billion (₹332.2 billion) of debt issuance, which was higher than expected.

Equities

• Meesho shows what happens to most tech short sellers after its 95 percent post-IPO rally. Thin public float and strong institutional demand for tech and consumer stocks is creating a trap for bearish investors in IPO markets. 

• Kotak, JPM, and Goldman all see a $25 billion (₹2.3 trillion) IPO market in 2026. Primary markets have grown from surging mutual fund and retail investor flows. There already is a pipeline with Jio and NSE both expecting to IPO next year. Earnings are also expected to rise to the tune of 15.9 percent next year compared to 2 percent this year.

Alts

• South Africa's Sanlam Group is buying Piramal's 14.72 percent stake in Shriram Insurance. Sanlam is paying $66.5 million (₹6 billion) and now owns just over 40 percent of Shriram. 

• MUFG invests $4.4 billion (₹394.2 billion) in Shriram Finance for a 20 percent stake. This is the largest foreign investment in the Indian financial services industry. Shriram is India’s 2nd largest non-bank lender, which focuses on loans for individuals and corporates that are unable to access traditional channels. 

Policy

• Parliamentary reforms helped save the BJP's weakening influence right before the five state elections next year. Last year’s general election saw a slim margin of victory for Modi due to students and other working-class individuals protesting his party. While an EU and US FTA are still being worked on, labor codes, employment guarantees, and new foreign capital help strengthen his position.

Do red cars cost more to insure?

You may have heard the myth that red cars cost more to insure, often with varying reasons why. The truth is, the color of your car has nothing to do with your premium. Insurance companies are more interested in your vehicle’s make, model, age, safety features, and your driving history. What’s not a myth, though — is that people really can save a ton of money by switching insurers. Check out Money’s car insurance tool to see if you could, too.

SEE IF YOU COULD SAVE

Reach out to [email protected] to reach our audience and see your advertisement here.

Infosys’s Friday Whipsaw

Infosys shares had a rollercoaster ride last Friday after its NYSE-listed ADRs surged over 56 percent in intraday trading, causing multiple trading halts to be triggered. The move was striking (or better yet, strange) not only for its size, but also because it failed to significantly affect ADRs of other Indian technology companies or even Infosys's India-listed stock. 

The company later said the price action was the result of volatility in its ADRs and confirmed that there were no material events requiring disclosure under India’s listing rules. That clarification helped calm speculation when markets reopened in India on Monday, with local shares edging higher as investors digested the explanation.

Traders and analysts largely converged on the view that the spike was caused by several research providers, like Zacks Investment Research, mislabeling a gas company with Infosys’ ADR ticket of INFY. Right after that, algo traders in the US shot the ADR up, having misinterpreted positive company news attributable to American Noble Gas, which has the same ticker. Most algorithmic investment shops will trade Indian tech companies in baskets, which resulted in some momentum for other tech ADRs like Wipro and Tata. 

Other market participants said the move resembled a short squeeze, likely amplified by elevated options activity given Friday’s U.S. expiry. Forced algorithmic buying combined with discretionary trading in thin liquidity. The ADR has since settled back near its pre-Friday level, while the local shares remain up 6 percent.

Infosys has otherwise had a challenging year, with its shares down modestly amid cautious global IT spending and uncertainty around H-1B policies that affect labor. Against that backdrop, the sudden surge in the ADR appears even more disconnected from the company’s underlying operating performance.

Separately, Infosys disclosed progress on a legal overhang tied to its U.S. subsidiary, Infosys McCamish Systems. The company said a U.S. court granted final approval to a $17.5 million (₹1.6 billion) settlement related to class-action lawsuits, which will take effect if no appeal is filed within 30 days. While modest relative to Infosys’s size, the development helps reduce lingering uncertainty for long-term investors.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

Sponsor the next newsletter to reach tens of thousands of U.S.-based business-savvy professionals. Reach out to [email protected].

Could your business use expert insights to power growth in India? Reach out to [email protected] for a free introductory call.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.