Recent Price Movement and Market Context
On 24 February, Infosys Ltd’s shares closed at ₹1,276.55, down ₹51.90 or 3.91% from the previous close. The stock has been on a consistent downward trajectory, losing 8.24% over the past week and 23.59% over the last month. Year-to-date, the stock has declined by 21.03%, significantly underperforming the Sensex, which has fallen by only 3.51% in the same period. Over the past year, Infosys shares have dropped 27.64%, while the Sensex has gained 10.44%, highlighting a stark divergence from the broader market’s positive trend.
Today, the stock touched an intraday low of ₹1,265, marking a fresh 52-week low. The weighted average price indicates that more volume was traded near this low, suggesting selling pressure at lower price levels. Additionally, Infosys is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling a bearish technical outlook.
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Sector and Investor Participation Impact
The IT - Software sector, to which Infosys belongs, has also experienced a decline, falling 4.39% on the same day. While Infosys marginally outperformed its sector by 0.51% today, the overall negative sentiment in the sector has weighed on the stock. Investor participation appears to be waning, with delivery volumes on 23 February falling by 6.64% compared to the five-day average. This decline in investor engagement may be contributing to the stock’s inability to find strong buying support amid the broader market weakness.
Despite the recent price weakness, the stock remains liquid enough to support sizeable trades, with a trade size capacity of approximately ₹49.71 crore based on 2% of the five-day average traded value. However, the prevailing downward momentum and reduced investor interest have kept the stock under pressure.
Fundamental Strengths Amid Price Weakness
Infosys continues to demonstrate robust long-term fundamentals. The company boasts an average Return on Equity (ROE) of 31.88%, reflecting efficient capital utilisation. Net sales have grown at a healthy annual rate of 12.19%, and the company maintains a low average debt-to-equity ratio of zero, indicating a strong balance sheet with minimal leverage.
Valuation metrics also suggest that the stock is trading at a fair value relative to its peers, with a Price to Book Value of 6.2 and a PEG ratio of 2.6. Profits have increased by 4.5% over the past year, despite the stock’s negative price performance. Additionally, the company offers a relatively high dividend yield of 3.47%, which may appeal to income-focused investors during volatile market conditions.
Institutional investors hold a significant 71.55% stake in Infosys, underscoring confidence from well-informed market participants who typically have a longer-term investment horizon. The company’s market capitalisation of ₹5,38,643 crore makes it the second largest in the IT sector, representing over 15% of the sector’s total market value. Its annual sales of ₹1,73,173 crore account for nearly 17% of the industry, highlighting its dominant position.
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Conclusion: Why Infosys Shares Are Falling
The recent decline in Infosys Ltd’s share price is primarily driven by broader sector weakness and negative market sentiment. The stock’s fall below key moving averages and the fresh 52-week low indicate sustained selling pressure. Reduced investor participation and a general downturn in the IT sector have compounded the stock’s challenges. While the company’s long-term fundamentals remain strong, including solid profitability, low debt, and attractive dividend yield, these factors have not been sufficient to counteract the prevailing bearish momentum in the short term.
Investors should weigh the company’s fundamental strengths against the current technical weakness and sector headwinds when considering their positions. The stock’s underperformance relative to the Sensex and its sector peers suggests caution, although its market leadership and institutional backing provide a foundation for potential recovery when market conditions improve.
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