Heavy Put Option Volume Highlights Bearish Sentiment
On 20 January 2026, Bajaj Finance Ltd recorded the highest put option volume among active stocks, with 3,757 contracts traded at the ₹950 strike price expiring on 27 January 2026. This activity generated a turnover of ₹364.05 lakhs and an open interest of 1,897 contracts, underscoring significant investor interest in downside protection or speculative bearish bets. The underlying stock closed at ₹943.80, slightly below the strike price, indicating that the ₹950 put options are positioned near-the-money, which typically attracts hedging and speculative flows.
Price Performance and Technical Weakness
Bajaj Finance’s share price declined by 2.94% on the day, underperforming its NBFC sector peers by 1.39% and the Sensex by 2.07%. The stock touched an intraday low of ₹945, with the weighted average traded volume concentrated near this low, signalling selling pressure. Notably, the stock has reversed after two consecutive days of gains, suggesting a potential short-term downtrend.
Technical analysis reveals that Bajaj Finance is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — a bearish signal that may be prompting investors to seek downside protection through put options. Additionally, delivery volumes have declined by 3.06% compared to the five-day average, indicating reduced investor participation and possibly increased caution.
Market Capitalisation and Liquidity Context
With a market capitalisation of ₹5,87,744.52 crores, Bajaj Finance is a large-cap heavyweight in the NBFC sector. Despite the recent price weakness, the stock remains liquid, with an average traded value sufficient to support trade sizes of up to ₹13.76 crores based on 2% of the five-day average traded value. This liquidity facilitates active options trading and allows institutional investors to execute sizeable hedging strategies efficiently.
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Investor Positioning and Hedging Strategies
The concentration of put option activity at the ₹950 strike price suggests that investors are positioning for a potential decline or are hedging existing long exposures. Given the stock’s current price near ₹943.80, these puts offer a protective floor for holders wary of further downside. The open interest of 1,897 contracts indicates that a sizeable number of investors are maintaining these positions, which could influence price dynamics as expiry approaches.
Such elevated put activity often precedes volatility, as traders adjust their positions in response to market developments or earnings announcements. The expiry date of 27 January 2026 is imminent, and the clustering of open interest near the current price level may lead to increased gamma and delta hedging by market makers, potentially amplifying intraday price swings.
Mojo Score and Analyst Ratings
Bajaj Finance currently holds a Mojo Score of 71.0, categorised as a Buy rating by MarketsMOJO. This represents a downgrade from its previous Strong Buy grade assigned on 21 January 2025, reflecting a moderation in the stock’s momentum and quality metrics. The Market Cap Grade remains at 1, indicating its status as a large-cap stock with substantial market presence.
Despite the recent bearish signals, the Buy rating suggests that the company’s fundamentals and long-term prospects remain intact, though investors should be mindful of near-term volatility and sector headwinds affecting NBFCs.
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Sector and Broader Market Comparison
In comparison to the NBFC sector, which declined by 1.24% on the same day, Bajaj Finance’s 2.94% drop indicates a sharper correction. The Sensex’s modest 0.50% decline further highlights the stock’s relative weakness. This divergence may be attributed to sector-specific concerns such as rising credit costs, regulatory scrutiny, or profit booking after recent gains.
Investors should monitor macroeconomic indicators and NBFC sector developments closely, as these factors will likely influence Bajaj Finance’s near-term trajectory and options market activity.
Expiry Patterns and Potential Price Movements
The clustering of put option open interest at ₹950 ahead of the 27 January expiry suggests a key support level for the stock. Should the price breach this level decisively, it may trigger further downside pressure as put holders exercise or close positions. Conversely, if the stock stabilises above this strike, put sellers may face losses, potentially leading to a short squeeze or rebound.
Market participants should watch for changes in open interest and volume in the coming days to gauge shifts in sentiment and hedging intensity.
Conclusion: Cautious Outlook with Hedging Activity Intensifying
The surge in put option trading in Bajaj Finance Ltd reflects a cautious stance among investors amid technical weakness and sector headwinds. While the company retains a Buy rating and strong fundamentals, the near-term outlook is clouded by increased bearish positioning and declining price momentum. Traders and investors should remain vigilant of expiry dynamics and broader market cues to navigate potential volatility effectively.
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