Cipla Ltd Sees Surge in Put Option Activity Amid Bearish Market Sentiment

Heavy Put Option Trading Highlights Bearish Positioning

On 23 January 2026, Cipla’s put options with a strike price of ₹1300 expiring on 27 January 2026 emerged as the most actively traded contracts in the segment. A total of 15,391 contracts exchanged hands, generating a turnover of approximately ₹70.88 crores. The open interest for these puts stands at 2,607 contracts, indicating sustained interest and potential accumulation of bearish bets or protective hedges.

The underlying stock price at ₹1326.20 is hovering just above the ₹1300 strike, suggesting that traders are positioning for a possible decline or increased volatility in the near term. This activity is consistent with Cipla’s recent price action, which has seen the stock hit a new 52-week low of ₹1303 on the same day, marking a fresh nadir for the pharmaceutical giant.

Technical Weakness and Sector Underperformance

Cipla’s share price has been under pressure, declining by 4.34% on the day, significantly underperforming its sector benchmark which fell by only 0.86%. The stock’s 1-day return of -3.85% also lags behind the broader Sensex’s modest decline of 0.77%, underscoring the relative weakness in Cipla’s performance.

Technically, Cipla is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a persistent downtrend. The weighted average price of traded volumes skewed towards the day’s low further confirms selling pressure. Additionally, delivery volumes have dropped sharply by 35.93% compared to the 5-day average, indicating waning investor participation and possibly increased short-term speculative activity.

Market Cap and Mojo Score Reflect Caution

With a market capitalisation of ₹1,11,012 crores, Cipla remains a large-cap stock but its Mojo Score has deteriorated to 44.0, earning a Sell grade as of 7 January 2026, down from a previous Hold rating. This downgrade reflects weakening fundamentals or sentiment as assessed by MarketsMOJO’s proprietary scoring system, which factors in financial metrics, price trends, and quality grades.

Expiry Patterns and Investor Sentiment

The expiry date of 27 January 2026 is approaching rapidly, and the concentration of put option activity at the ₹1300 strike price suggests that investors are bracing for further downside or are actively hedging existing long positions. The open interest data indicates that many traders have either initiated fresh bearish positions or are rolling over protective puts to guard against near-term risks.

Such elevated put volumes often precede heightened volatility, as market participants adjust their portfolios in response to earnings announcements, regulatory developments, or sector-specific headwinds. In Cipla’s case, the pharmaceutical sector has faced challenges including pricing pressures, regulatory scrutiny, and competitive dynamics, which may be contributing to the cautious stance.

Liquidity and Trading Dynamics

Cipla’s liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transaction sizes up to ₹6.85 crores based on 2% of the 5-day average traded value. This ensures that institutional investors and traders can execute hedging strategies or speculative trades without significant market impact.

The delivery volume of 8.49 lakh shares on 22 January 2026, despite its recent decline, still reflects meaningful participation from long-term investors. However, the sharp drop in delivery volumes compared to recent averages may indicate a shift towards short-term trading and option-based strategies.

Implications for Investors and Traders

The surge in put option activity at the ₹1300 strike price, combined with Cipla’s technical weakness and sector underperformance, signals a cautious outlook among market participants. Investors holding Cipla shares may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk.

For traders, the elevated open interest and turnover in puts present opportunities to capitalise on volatility through option spreads or directional bets. However, the stock’s large-cap status and liquidity profile mean that any sharp moves could attract institutional attention, potentially amplifying price swings.

Sector and Market Context

The Pharmaceuticals & Biotechnology sector has been under pressure due to a combination of regulatory challenges, pricing reforms, and competitive pressures from generics and biosimilars. Cipla’s underperformance relative to its sector peers and the broader market reflects these headwinds.

Given the stock’s current Mojo Grade of Sell and deteriorating technical indicators, investors may prefer to monitor sector developments closely and consider diversification or alternative investments within the healthcare space.

Conclusion

Cipla Ltd.’s recent spike in put option trading ahead of the 27 January expiry highlights growing bearish sentiment and hedging activity. The stock’s technical weakness, new 52-week lows, and underperformance relative to sector and market benchmarks reinforce the cautious stance adopted by investors. While liquidity remains sufficient for active trading, the deteriorating fundamentals and Mojo downgrade suggest that Cipla faces near-term challenges that warrant close monitoring.

Market participants should weigh the risks carefully and consider protective strategies or alternative investments as the expiry date approaches and volatility potentially increases.

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