Bharat Heavy Electricals Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 11 February 2026, BHEL emerged as one of the most actively traded stocks in the put options segment. The two most traded put strikes were ₹260 and ₹250, both expiring on 24 February 2026. The ₹260 strike saw 4,252 contracts traded, generating a turnover of approximately ₹700.94 lakhs, while the ₹250 strike recorded 2,573 contracts with a turnover of ₹185.74 lakhs. Open interest figures stood at 1,228 and 1,520 contracts respectively, indicating sustained investor interest in downside protection or speculative bearish bets.

The underlying stock price at the time was ₹260.30, placing the ₹260 strike near-the-money and the ₹250 strike slightly out-of-the-money. This concentration of put activity around these levels reflects a market expectation of potential downward pressure or at least a desire to hedge existing long positions against further declines.

Price Performance and Market Context

BHEL’s stock price has recently underperformed its sector and the broader market. On the day in question, the stock declined by 5.83%, significantly lagging the heavy electrical equipment sector’s 1.99% fall and the Sensex’s marginal 0.01% dip. The stock opened with a gap down of 5.14% and touched an intraday low of ₹259.25, down 6.1% from the previous close.

Technically, BHEL remains above its 200-day moving average, a long-term support indicator, but trades below its 5-day, 20-day, 50-day, and 100-day moving averages. This mixed technical picture suggests short-term weakness amid longer-term stability. Additionally, delivery volumes have declined by 6.28% compared to the five-day average, signalling reduced investor participation and possibly increased caution.

With a market capitalisation of ₹90,533.65 crores, BHEL is classified as a mid-cap stock within the heavy electrical equipment industry. Its current Mojo Score stands at 65.0, reflecting a Hold rating, an upgrade from a Sell rating issued on 15 September 2025. Despite this upgrade, the stock’s market cap grade remains low at 2, indicating limited institutional interest or liquidity constraints relative to larger peers.

Investor Sentiment and Hedging Strategies

The surge in put option volumes at the ₹260 and ₹250 strikes suggests that investors are either positioning for a potential correction or actively hedging existing long exposures. The near-the-money ₹260 strike is particularly notable, with the highest number of contracts traded, indicating a consensus that the stock may test or breach this level before expiry.

Put options serve as a protective tool for portfolio managers and traders seeking to limit downside risk. The elevated open interest at these strikes confirms that many market participants are maintaining these positions rather than closing them out, which could imply a sustained bearish outlook or a cautious stance amid uncertain macroeconomic or sector-specific factors.

Given BHEL’s exposure to government infrastructure projects and the heavy electrical equipment sector’s sensitivity to capital expenditure cycles, investors may be factoring in potential delays or budgetary constraints that could impact earnings visibility in the near term.

Comparative Sector Performance and Outlook

While BHEL has underperformed its sector by over 4% on the day, the heavy electrical equipment industry itself has faced headwinds from fluctuating raw material costs and competitive pressures. The sector’s 1.99% decline on the day reflects broader investor caution, but BHEL’s sharper fall and put option activity highlight company-specific concerns or a more pronounced bearish sentiment.

Analysts tracking BHEL have noted the stock’s recent trend reversal after two consecutive days of gains, signalling a potential shift in momentum. The stock’s technical indicators, combined with falling delivery volumes, suggest that investor conviction is weakening, which may prompt further downside or consolidation in the coming weeks.

Implications for Investors

For investors holding BHEL shares, the heightened put option activity and recent price weakness warrant a cautious approach. The stock’s Hold rating and Mojo Score of 65.0 reflect a neutral stance, but the downgrade from a Sell rating earlier indicates some improvement in fundamentals or outlook.

Those seeking to hedge downside risk may consider put options at or near the ₹260 strike, which currently commands the highest liquidity and open interest. Conversely, speculative traders might view the elevated put volumes as an opportunity to capitalise on potential volatility ahead of the 24 February expiry.

Long-term investors should monitor sector developments, government policy announcements, and quarterly earnings closely, as these factors will influence BHEL’s trajectory and investor sentiment going forward.

Conclusion

Bharat Heavy Electricals Ltd. is currently navigating a challenging phase marked by increased bearish positioning in the options market and a notable decline in share price. The concentration of put option trades at key strike prices ahead of the February expiry underscores investor caution and hedging activity. While the stock’s technical and fundamental indicators suggest a Hold rating, market participants should remain vigilant to evolving sector dynamics and price action in the near term.

Overall, BHEL’s recent market behaviour offers valuable insights into investor psychology and risk management strategies within the heavy electrical equipment sector, making it a stock to watch closely in the coming weeks.

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