Coforge Ltd Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights

On 21 January 2026, Coforge Ltd emerged as the most active stock in put options trading, with 4,050 contracts exchanged at the ₹1,600 strike price expiring on 27 January 2026. The turnover for these contracts reached ₹475.67 lakhs, underscoring substantial investor interest in downside protection or speculative bearish bets. Open interest stood at 1,958 contracts, indicating that a sizeable number of positions remain open, potentially foreshadowing further volatility in the near term.

The underlying stock price was ₹1,624.40 at the time, just above the put strike price, suggesting that traders are positioning for a possible decline below this level. The weighted average price of traded options clustered near the day’s low, reinforcing the bearish sentiment prevailing in the options market.

Price and Technical Weakness

Coforge’s share price has been under pressure, falling by 4.22% on the day, significantly underperforming its sector which declined by 1.00%, and the broader Sensex which slipped 0.16%. The stock has recorded a consecutive three-day decline, losing 6.52% over this period. Intraday, it touched a low of ₹1,611.20, down 4.87% from the previous close, with heavier volumes traded near this low point.

Technically, Coforge is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. This technical deterioration is likely contributing to the increased demand for put options as investors seek to hedge existing long positions or speculate on further downside.

Investor Participation and Liquidity

Investor participation appears to be waning, with delivery volumes on 20 January falling by 30.51% compared to the five-day average, registering at 9.85 lakh shares. This decline in delivery volume suggests reduced conviction among buyers, potentially amplifying bearish pressures. Despite this, the stock remains sufficiently liquid, with a trade size capacity of approximately ₹8 crore based on 2% of the five-day average traded value, allowing for active trading and option strategies.

Fundamental and Market Context

Coforge Ltd operates within the Computers - Software & Consulting industry and is classified as a mid-cap stock with a market capitalisation of approximately ₹56,955 crore. The company holds a Mojo Score of 72.0, reflecting a Buy rating, though this represents a downgrade from a previous Strong Buy grade assigned on 19 January 2026. The downgrade may be a response to recent price weakness and sector headwinds.

Despite the downgrade, Coforge’s market cap grade remains at 2, indicating a mid-tier valuation relative to its peers. The stock’s recent underperformance relative to its sector by 3.5% on the day further highlights the challenges it faces amid broader market volatility and sector rotation.

Expiry Patterns and Investor Positioning

The concentration of put option activity at the ₹1,600 strike price, just below the current market price, suggests that investors are bracing for a potential correction or are actively hedging against downside risk. The expiry date of 27 January 2026 is imminent, which often leads to heightened option activity as traders adjust positions ahead of expiry.

Open interest data indicates that many traders have established or rolled over bearish positions, which could translate into increased volatility as expiry approaches. The combination of falling prices, technical weakness, and heavy put option volumes points to a cautious market stance on Coforge in the short term.

Implications for Investors

For investors holding Coforge shares, the surge in put option activity serves as a warning signal to reassess risk exposure. The stock’s failure to hold above key moving averages and the persistent decline in delivery volumes suggest weakening demand. Investors may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk.

Conversely, traders with a bearish outlook might view the current option activity as an opportunity to capitalise on expected declines, especially given the stock’s technical breakdown and sector underperformance. However, the mid-cap nature of Coforge means that liquidity and volatility can fluctuate, requiring careful position sizing.

Sector and Broader Market Comparison

Within the Computers - Software & Consulting sector, Coforge’s recent underperformance contrasts with a more resilient sector average decline of just 1.00% on the day. This divergence highlights company-specific challenges or profit-taking pressures that are not as pronounced across the broader sector.

The Sensex’s marginal decline of 0.16% on the same day further emphasises that Coforge’s weakness is more acute than the general market trend. Investors should monitor sector developments and broader IT spending trends, as these will influence Coforge’s medium-term outlook.

Outlook and Conclusion

Coforge Ltd’s elevated put option volumes and open interest at the ₹1,600 strike price ahead of the 27 January expiry reflect a cautious and somewhat bearish market stance. The stock’s technical breakdown below all major moving averages, coupled with declining investor participation, suggests that downside risks remain elevated in the near term.

While the company retains a Buy rating with a Mojo Score of 72.0, the recent downgrade from Strong Buy signals that investors should exercise prudence. Hedging strategies and close monitoring of price action around key support levels will be crucial for managing risk.

Overall, the options market activity provides valuable insight into investor sentiment, highlighting the importance of integrating derivatives data into equity analysis for a comprehensive view of market expectations.

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