Asian Paints Sees Heavy Put Option Activity Amid Four-Day Decline

Put Option Activity Highlights

On 29 January 2026, Asian Paints saw 3,559 put option contracts traded at the ₹2,400 strike price, with a turnover of ₹358.12 lakhs. This level of activity is significant given the underlying stock price of ₹2,430.5, indicating that investors are positioning for a potential downside or seeking protection against further declines. The open interest for these contracts stands at 1,354, underscoring sustained interest in bearish bets or hedging strategies ahead of the February expiry.

Stock Performance and Technical Indicators

Asian Paints has been under pressure recently, with the stock falling by 3.32% on the day and touching an intraday low of ₹2,432.1. The weighted average price of traded volumes has gravitated closer to the day's low, suggesting selling pressure. The stock is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup. This contrasts with the broader paints sector, which declined by 3.2%, and the Sensex, which fell by a more modest 0.56% on the same day.

Investor Participation and Liquidity

Investor engagement has intensified, with delivery volumes rising to 13.78 lakh shares on 28 January, a 68.23% increase compared to the five-day average. This surge in participation, combined with a liquidity profile that supports trade sizes up to ₹12.23 crore based on 2% of the five-day average traded value, makes Asian Paints a focal point for both institutional and retail investors looking to adjust their positions amid market volatility.

Mojo Score and Rating Revision

MarketsMOJO assigns Asian Paints a Mojo Score of 67.0, categorising it as a 'Hold' with a recent downgrade from a 'Buy' rating on 16 January 2026. The downgrade reflects the deteriorating price momentum and technical indicators, despite the company's large market capitalisation of ₹2,36,107 crore. The Market Cap Grade remains at 1, indicating its status as a large-cap stock, but the shift in rating signals caution for investors amid the current market environment.

Expiry Patterns and Market Implications

The 24 February 2026 expiry date for the most active put options is less than a month away, intensifying focus on Asian Paints' near-term price trajectory. The concentration of put contracts at ₹2,400, slightly below the current market price, suggests that traders are bracing for a potential test of this support level. Should the stock breach this strike price, the put options could gain intrinsic value, benefiting holders who have taken bearish positions or hedged long exposures.

Bearish Positioning and Hedging Strategies

The surge in put option volume and open interest is indicative of a market consensus leaning towards caution. Investors may be employing these options to hedge existing long positions against further downside risk or to speculate on a correction in the paints sector. Given Asian Paints' dominant market position and large-cap status, such hedging activity is often a barometer of broader sector sentiment and risk appetite.

Comparative Sector and Market Context

While Asian Paints has declined by 3.35% on the day, the paints sector overall has fallen by 2.91%, signalling that the stock is underperforming its peers. This relative weakness, coupled with the technical breakdown below key moving averages, may be prompting investors to seek downside protection through put options. The Sensex's modest decline of 0.56% further highlights the stock-specific pressures facing Asian Paints.

Valuation and Quality Metrics

Despite the recent negative momentum, Asian Paints maintains a strong fundamental profile with a large market cap and established brand presence. However, the downgrade from 'Buy' to 'Hold' by MarketsMOJO reflects concerns over near-term price action and technical deterioration. Investors should weigh these factors carefully, considering both the stock's quality and the current bearish positioning evident in the options market.

Outlook and Investor Considerations

Given the current technical weakness and elevated put option activity, investors should approach Asian Paints with caution in the near term. The stock’s breach below multiple moving averages and the concentrated put option interest at ₹2,400 strike price suggest that downside risks remain elevated. However, the company’s strong fundamentals and large-cap stature may provide a floor for long-term investors.

Traders and portfolio managers may consider utilising put options as a hedging tool to mitigate risk or as a speculative instrument to capitalise on potential declines. Monitoring open interest changes and expiry dynamics will be crucial in assessing evolving market sentiment.

Conclusion

Asian Paints Ltd. is currently navigating a challenging phase marked by sustained price declines and increased bearish positioning in the options market. The surge in put option volumes and open interest at the ₹2,400 strike price ahead of the 24 February expiry highlights investor caution and hedging activity. While the stock’s fundamentals remain robust, technical indicators and market sentiment warrant a prudent approach for investors and traders alike.

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