Infosys shares experienced a significant rally, surging nearly 5% to reach an intraday high of ₹1,546.00. The stock's momentum was fueled by a notable decision from the company's promoters, including co-founder Narayana Murthy, to abstain from participating in the ₹18,000.00-crore share buyback program.

Market Reaction and Trading Activity

The market interpreted the promoters' decision as a strong vote of confidence in Infosys' future earnings potential. This sentiment triggered a substantial increase in trading activity, with volumes soaring to three times the 20-day average.

Buyback Details and Tax Implications

Infosys announced a share buyback at ₹1,800.00 per share, offering a premium of over ₹300.00 above the current market price of around ₹1,472.00. However, the company's promoters have decided not to participate due to unfavorable tax implications resulting from recent amendments to the Income Tax Act.

The Finance (No. 2) Act now treats the entire buyback amount as dividend income, subjecting it to a 35.88% tax rate for high-income residents. This results in a tax of about ₹646.00 per share, leaving only ₹1,154.00 post-tax. In contrast, selling shares in the open market under the capital gains regime results in a much lower tax rate of 14.95%, leaving shareholders with approximately ₹113.00 more per share after tax.

The new tax regime benefits non-resident shareholders who enjoy concessional dividend tax rates of 5% to 20% under tax treaties. Tax experts suggest this policy change makes buybacks less attractive for domestic investors and expect more promoters to avoid participation in future buyback offers.

Financial Performance and Guidance

Infosys reported a constant currency revenue growth of 2.2% sequentially, demonstrating resilience in a challenging market environment. The company also raised the lower end of its guidance range to 2-3%, further bolstering investor confidence.

Sector Outlook

The rally in Infosys shares comes at a time when IT sector valuations are at five-year lows. This has prompted a rotation of global funds from private banks to IT stocks, potentially signaling a shift in investor sentiment towards the technology sector.

Industry Trends

The H1 hiring stability report suggests that the IT downcycle may be nearing its end, providing a positive outlook for the sector as a whole. This trend, coupled with Infosys' strong performance, could indicate a potential turnaround for IT stocks.

Infosys Foundation USA's Digital Workforce Innovation Program

In a separate development, Infosys Foundation USA has announced a $250,000 grant to the National Association for Community College Entrepreneurship (NACCE) for the Digital Workforce Innovation Program. Six higher education institutions have been selected as awardees:

1. Coppin State University (MD)
2. Foothill College (CA)
3. GateWay Community College (AZ)
4. Houston City College (TX)
5. Ivy Tech Community College (IN)
6. North Iowa Area Community College (IA)

These institutions will receive funding, technical assistance, coaching, and access to the Infosys Springboard digital learning platform over an 18-month period. The program aims to equip students with digital skills including AI, cloud computing, data analytics, and cybersecurity. Students will also gain access to SkillPointe, NACCE's career exploration technology.

The initiative targets reaching over 3,000 students over two years to support STEM career pathways. MakerUSA will provide consulting and technical assistance, connecting institutions with its network of 40+ leading institutions focused on inclusive maker education.

In conclusion, Infosys' strong market performance, coupled with positive financial results and the strategic decision by its promoters to skip the buyback due to tax implications, has created a bullish sentiment around the stock. As the IT sector shows signs of recovery, investors will be closely watching Infosys' future performance and its ability to capitalize on emerging opportunities in the technology landscape. Additionally, the company's philanthropic efforts through Infosys Foundation USA demonstrate its commitment to fostering digital skills and supporting STEM education in the United States.

Infosys , India's second-largest IT services company, reported robust financial results for the second quarter of fiscal year 2026 and raised its full-year revenue growth guidance.

Key Highlights

• Q2 revenue grew 2.2% sequentially and 2.9% year-on-year in constant currency terms
• Operating margin expanded by 20 basis points sequentially to 21.00%
• Large deal total contract value (TCV) was $3.10 billion, with 67% being net new
• Announced an additional $1.60 billion mega deal after quarter end
• Added 8,000 employees during the quarter
• Raised FY26 revenue growth guidance to 2-3% in constant currency (from 1-3% earlier)
• Maintained operating margin guidance at 20-22% for FY26

Management Commentary

CEO Salil Parekh stated that client interactions are showing a strong focus on deploying AI across enterprises for both growth and cost efficiency. The company is seeing good traction in Financial Services and Manufacturing verticals, while Retail continues to face constraints.

Regarding visa rule changes, Infosys mentioned it has been working on localization in key markets like the US for years. The company plans to leverage more local hiring, nearshore centers, and offshore delivery to ensure continuity of client services.

CFO Jayesh Sanghrajka noted that deal pipelines remain strong, with a focus on cost optimization, vendor consolidation and AI-driven efficiencies. However, the overall demand environment remains uncertain.

AI Initiatives

Infosys highlighted its leadership in enterprise AI, with over 2,500 generative AI projects and 200+ agentic AI projects for clients. The company is also leveraging AI to improve its own operations.

Outlook

Looking ahead, Infosys expects some seasonal softness in the second half due to fewer working days and furloughs. However, the raised guidance reflects confidence from the strong H1 performance.

While macroeconomic uncertainties persist, Infosys remains well-positioned to capture opportunities in enterprise AI transformation and cost optimization initiatives for clients.