CG Power Sees Heavy Put Option Activity Amid Bearish Sentiment and Declining Momentum

Put Option Activity Highlights

On 9 January 2026, CG Power & Industrial Solutions Ltd (CGPOWER) recorded significant put option volumes expiring on 27 January 2026. The strike prices attracting the highest interest were ₹590 and ₹600, with 4,032 and 4,354 contracts traded respectively. The turnover for these strikes was substantial, amounting to ₹555.55 lakhs for the ₹590 strike and ₹733.52 lakhs for the ₹600 strike. Open interest figures further underscore the bearish sentiment, with 567 contracts outstanding at ₹590 and 987 at ₹600.

These figures indicate that traders are positioning for a potential downside or are hedging existing long exposures in anticipation of volatility. The underlying stock price at the time stood at ₹605.20, just above the key strike prices, suggesting that the market is bracing for a possible correction or consolidation below these levels.

Price Performance and Technical Indicators

CG Power & Industrial Solutions has been on a downward trajectory, underperforming its sector by 2.26% on the day and registering a 1-day return of -1.77%, compared to the sector’s positive 0.28% and Sensex’s marginal decline of -0.12%. The stock has declined for five consecutive sessions, cumulatively losing 6.72% over this period. Intraday, it touched a low of ₹586.50, down 4.52%, with the weighted average traded volume skewed towards the lower price range, indicating selling pressure.

Technically, the stock is trading below all major moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a sustained bearish trend. This technical weakness aligns with the surge in put option activity, as investors seek downside protection or speculate on further declines.

Investor Participation and Liquidity

Investor engagement has intensified, with delivery volumes on 8 January reaching 43.7 lakh shares, a remarkable 243.98% increase over the five-day average. This heightened participation suggests that the recent price weakness is attracting attention, possibly from short sellers or cautious investors adjusting their portfolios.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹5.47 crore based on 2% of the five-day average traded value. This ensures that option traders and institutional participants can execute their strategies without significant market impact.

Fundamental and Market Context

CG Power & Industrial Solutions operates in the heavy electrical equipment sector, a capital-intensive industry sensitive to infrastructure spending and industrial demand cycles. The company’s current market capitalisation stands at ₹92,745 crore, categorising it as a large-cap stock. Despite its size, the stock’s Mojo Score has declined to 55.0, with a Mojo Grade downgraded from Buy to Hold as of 21 November 2025, reflecting tempered expectations amid recent performance challenges.

The downgrade signals a cautious stance by analysts, likely influenced by the stock’s recent price weakness and sector headwinds. The Market Cap Grade remains at 1, indicating a strong market capitalisation but not necessarily translating into immediate price strength.

Options Expiry and Investor Strategy

The expiry date of 27 January 2026 is critical, as the concentration of put options at ₹590 and ₹600 strikes suggests a key support zone for the stock. Investors holding long positions may be utilising these puts as a hedge against further downside, while speculators could be betting on a decline below these levels to capitalise on premium gains.

Given the stock’s current trading below all major moving averages and the recent five-day losing streak, the market consensus appears tilted towards caution. The elevated open interest at these strikes also implies that a significant number of contracts remain open, potentially leading to increased volatility as expiry approaches.

Comparative Sector Performance

Within the heavy electrical equipment sector, CG Power & Industrial Solutions has notably underperformed. While the sector posted a modest gain of 0.28% on the day, CG Power declined by 2.27%, highlighting relative weakness. This divergence may be attributed to company-specific concerns or broader market sentiment shifting away from capital goods amid macroeconomic uncertainties.

Investors should monitor sector trends closely, as any recovery in industrial activity or infrastructure spending could provide a catalyst for CG Power’s stock. Conversely, sustained sector weakness may exacerbate the bearish positioning reflected in the options market.

Investor Takeaway and Outlook

The pronounced put option activity in CG Power & Industrial Solutions Ltd underscores a cautious or bearish stance among market participants. The concentration of contracts at strikes just below the current market price, combined with the stock’s technical weakness and recent downgrade, suggests that investors are bracing for potential downside or volatility in the near term.

However, the increased delivery volumes and liquidity indicate that the stock remains actively traded, providing opportunities for nimble investors to capitalise on price swings. Those holding long positions may consider protective strategies, while short-term traders could exploit the heightened option premiums and volatility.

As the 27 January expiry approaches, monitoring open interest changes and price action around the ₹590-₹600 range will be crucial for gauging market sentiment and potential support levels. Investors should also keep an eye on sector developments and broader macroeconomic indicators that could influence the heavy electrical equipment industry’s trajectory.

Conclusion

CG Power & Industrial Solutions Ltd’s recent surge in put option trading reflects a market environment marked by uncertainty and bearish positioning. While the stock’s fundamentals and sector dynamics warrant close attention, the options market provides valuable insight into investor expectations and risk management strategies. Careful analysis of these factors will be essential for making informed investment decisions in the coming weeks.

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