INFY heads into the final week of May with a fractured picture: short sellers are quietly reducing exposure, yet the borrow market remains as tight as it has been all year.
The headline story from earlier this week — the complete closure of the lending pool — has not materially changed. Availability is still near zero, meaning virtually every share in the borrow pool is already lent out. That reading matches the 52-week tightest level, and it arrived with brutal speed: as recently as May 18, availability was around 7%, a merely tight condition. The collapse to near-zero happened across five trading days. The cost to borrow climbed to approximately 23% APR in the process, up from around 12–13% in mid-April, and there has been no meaningful retreat. Short sellers attempting to open new positions are being quoted the full rate on new loans — a meaningful friction cost on top of a stock that has already fallen roughly 5% on the week and is down close to 28% year-to-date.
Short interest itself tells a different story — and the divergence is worth naming. After peaking at 4.59% of free float on May 19, gross short interest has been drifting lower. By May 26, SI had eased to 4.44% of float, a drop of roughly 150 basis points from the high and the lowest reading in about a month. That is not a dramatic unwind, but it moves in the opposite direction from the borrow squeeze. One interpretation: some shorts are exiting precisely because the cost to carry has become prohibitive. Another is that lower SI simply reflects position-trimming ahead of the July 23 earnings date. Either way, the divergence between falling gross short interest and near-zero availability is the key tension this week — a pool of remaining shorts that cannot easily be replaced, trapped in positions that cost 23% a year to hold.
The broader fundamental backdrop offers limited support. The ORTEX factor score picture is lopsided: the dividend score ranks in the 99th percentile, and the EV/EBIT score is in the 79th — reasonable value anchors. But EPS momentum over 30 days ranks just 35th, EPS surprise at 19th, and the 12-month forward EPS year-on-year growth estimate ranks in the bottom quintile at 20th. Momentum is the clear structural drag, consistent with the 28% year-to-date drawdown and the April earnings print that sent the stock down 3.2% on the day and 6.5% over five days. The quality score remains genuinely strong — return on assets healthy, Z-score resilient — but the Street continues to discount quality against weak near-term earnings trajectory. No recent analyst changes for INFY appeared in the current data, and the most recent institutional filing data through April 30 shows SBI Funds adding 4.4 million shares and ICICI Prudential adding 2.8 million — modest accumulation by domestic asset managers, but not a contrarian signal of sufficient scale to shift the narrative.
The next scheduled earnings event is July 23. Given that the last print produced a –3.2% / –6.5% move (1-day / 5-day), and that both existing short holders and potential new ones now face extreme borrow costs, the setup into that date is unusually charged. Shorts already on the book face a rising carry burden. New shorts face near-zero availability. And the stock has already shed nearly a third of its value this year. Whether the SI decline of the past week represents genuine covering or just position-trimming, the dynamics of the borrow market and the July earnings date are the two things worth watching most closely from here.
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