Infosys Shares Jump 4% as Promoters Skip ₹18,000 Crore Buyback – IT Stocks Rally on US Trade Deal Hopes

Infosys shares jumped nearly 4% on October 23, 2025, after the company announced that its promoters would not participate in India’s largest-ever share buyback worth ₹18,000 crore. The IT major led a broader rally in technology stocks as reports emerged that India and the United States are close to finalizing a trade deal that could significantly reduce tariffs on Indian exports.

The Sensex closed at 84,556, up 130 points (0.15%), while the Nifty settled at 25,891, gaining just 23 points (0.09%). Despite a strong opening where the Nifty touched 26,104, profit booking in the afternoon session erased most gains. However, IT stocks remained the standout performers, with the Nifty IT index surging 2.2% to close at 36,230.

Promoters’ Strategic Exit from Buyback

Infosys announced through a regulatory filing on October 22 that its promoters and promoter group members—including co-founder Nandan Nilekani, chairperson Sudha Murty, and other founding families—have decided not to tender their shares in the ₹18,000 crore buyback program. The promoters collectively hold 13.05% of the company’s equity.

The decision was communicated through letters dated between September 14 and September 19, 2025. “Since the promoters and the promoter group of the Company have declared their intention to not participate in the Buyback, Equity Shares held by them have not been considered for the purposes of computing the entitlement ratio,” the company stated in its filing.

This move is widely viewed as a strong signal of confidence in the company’s long-term prospects. By staying out of the buyback, promoters are essentially telling the market they believe the stock has more upside potential than the ₹1,800 per share being offered in the buyback—a 22% premium over the previous closing price of ₹1,472.

More importantly for retail investors, the promoters’ decision improves the buyback entitlement ratio. With 13.05% of shares excluded from the buyback calculation, other shareholders will receive a proportionately larger allocation when tendering their shares. This makes the buyback significantly more attractive for retail and institutional investors.

Market analysts believe this decision reflects promoter confidence rather than concerns about tax implications. “The promoters’ decision to opt out of the buyback signals confidence in future prospects and improves the entitlement ratio for retail investors,” said Saurabh Jain, assistant vice president of retail equities at SMC Global.

IT Sector Rallies on US Trade Deal Optimism

The surge in IT stocks wasn’t just about Infosys. The entire technology sector rallied on growing optimism that India and the United States are on the verge of announcing a landmark trade agreement.

According to reports citing three people familiar with the matter, the proposed deal could see US tariffs on Indian exports slashed from the current punitive 50% to just 15-16%. This would be a game-changer for India’s export-oriented sectors, particularly IT services, textiles, and pharmaceuticals.

The key IT gainers on October 23 included:

• Infosys: Up 4.40% (leading the pack)
• HCL Technologies: Up 3.19%
• Tata Consultancy Services (TCS): Up 2.41%
• Mphasis: Up 2.20%
• Wipro: Up 1.74%
• LTIMindtree: Up 1.47%
• Tech Mahindra: Up 1.26%
• Persistent Systems: Up 1.21%

The IT sector derives a substantial portion of its revenue—often 50-70% for many companies—from the United States. Lower tariffs would directly improve margins and competitiveness for Indian IT firms bidding for projects in the US market.

The proposed trade deal reportedly centers on energy and agriculture. India may agree to gradually reduce its imports of Russian crude oil—which currently accounts for about 34% of India’s crude imports—and open its markets to non-genetically modified American corn and soymeal. In return, the US would provide substantial tariff relief.

President Donald Trump confirmed he had spoken with Prime Minister Narendra Modi on Tuesday, with discussions largely focused on trade. Trump indicated that Modi had assured him India would limit oil purchases from Russia, a key demand from Washington.

Understanding the ₹18,000 Crore Buyback

Infosys announced its fifth and largest-ever share buyback on September 11, 2025. The company will repurchase up to 10 crore (100 million) fully paid-up equity shares of face value ₹5 each at ₹1,800 per share through the tender offer route.

This represents 2.41% of the company’s total paid-up equity share capital. The buyback size of ₹18,000 crore is nearly double the company’s previous buyback of ₹9,300 crore conducted in 2022 through the open market route at a maximum price of ₹1,850 per share.

The buyback is part of Infosys’ capital allocation policy, which aims to return approximately 85% of free cash flow over a five-year period through a combination of dividends and share buybacks. With cash and cash equivalents exceeding ₹42,000 crore and free cash flow of ₹20,000 crore in FY25, Infosys has ample liquidity for such shareholder-friendly measures.

The company believes the buyback will enhance long-term shareholder value by reducing the equity base and improving key financial ratios like earnings per share (EPS) and return on equity (ROE).

Broader Market Impact and Sectoral Performance

While IT stocks stole the show, the broader market presented a mixed picture. The market opened strongly but witnessed profit booking in the afternoon session.

The BSE MidCap index slipped 0.2% at close, while the SmallCap index dropped 0.5%. The overall market breadth was negative, with over 2,400 stocks declining on the BSE compared to around 1,800 advancing shares.

Banking stocks also performed well, with Axis Bank, Kotak Mahindra Bank, and Shriram Finance among the top Nifty gainers. The Bank Nifty hit a fresh all-time high of 58,577 during the day before settling at 58,078.

On the downside, Eternal shed 3% and was the top Sensex loser. Bharti Airtel, Ultratech Cement, Adani Ports, ICICI Bank, and Reliance declined between 1-2% each.

Interestingly, textile and shrimp-related stocks registered sharp gains on hopes of the US-India trade deal. Stocks like Kitex Garments surged nearly 15%, Gokaldas Exports rallied 13%, and Welspun Living gained around 6%. These export-oriented companies had been severely impacted by the 50% US tariffs and stand to benefit significantly if the deal materializes.

What This Means for Retail Investors

The promoters’ decision to opt out of the Infosys buyback is genuinely good news for retail shareholders. Here’s why:

Better Entitlement Ratio: With 13.05% of shares (held by promoters) excluded from buyback calculations, the acceptance ratio for other shareholders increases proportionately. This means retail investors who tender their shares have a higher probability of getting their shares accepted.

Strong Confidence Signal: When founders and promoters who built the company from scratch decide not to sell at a 22% premium, it sends a powerful message about the company’s future prospects. They clearly believe the intrinsic value is higher.

Tax Efficiency: Recent tax law changes have made buybacks less attractive for resident shareholders. By opting out, promoters are essentially saying they’d rather hold the shares for long-term capital gains than take the buyback proceeds with higher tax implications.

For those holding Infosys shares, the buyback offers an attractive exit option at ₹1,800 per share (compared to the October 21 closing price of ₹1,472), representing a healthy premium. However, the promoters’ confidence might make some investors think twice about tendering.

Regarding the broader IT sector, the potential US-India trade deal could be a significant catalyst for renewed growth. After months of subdued sentiment due to macroeconomic headwinds and tariff uncertainties, Indian IT companies could see improved demand and better margins if the deal goes through.

What to Watch Next

Several key developments will shape the trajectory of both Infosys and the broader IT sector:

• Record Date Announcement: Infosys will announce the record date for determining shareholder entitlement for the buyback. This will trigger the actual buyback process.

• US-India Trade Deal Timeline: Reports suggest the deal could be announced during the ASEAN Summit later this month, where Prime Minister Modi and President Trump are expected to meet. Watch for official confirmation.

• IT Sector Earnings: With Q2 results season in full swing, focus on earnings reports from other IT majors to gauge sector-wide performance and management commentary on demand outlook.

• Tariff Implementation: Monitor whether the proposed 15-16% tariff rate is implemented and the timeline for its rollout. Any delays or changes could impact sentiment.

• FII Flows: Foreign institutional investors have been net buyers for the past few days. Continued FII inflows would support the market rally, especially in IT stocks.

• Technical Levels: The Nifty has resistance at 26,000-26,050 and support at 25,750-25,800. A decisive break above 26,000 could take the index toward 26,200 levels.

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This article is only for information purposes and is not investment advice. Before investing, do your own research.