Coforge Ltd Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Intense Put Option Trading Highlights Bearish Positioning

On the expiry date of 24 February 2026, Coforge’s put options at the ₹1220 strike price emerged as the most actively traded contracts, with 6,016 contracts changing hands. This translated into a turnover of ₹185.22 lakhs, underscoring the heightened interest in downside protection or speculative bearish bets. The open interest stood at 361 contracts, indicating a sustained build-up of positions rather than mere intraday speculation.

The underlying stock closed at ₹1224, hovering just above the ₹1220 strike, which is a critical technical level. The proximity of the underlying price to the strike price of the most traded puts suggests that market participants are bracing for potential downside or volatility around this level as expiry approaches.

Price Action and Technical Weakness Reinforce Negative Sentiment

Coforge’s price performance has been notably weak in recent sessions. The stock has declined for six consecutive trading days, shedding 12.11% over this period. On 24 February, it underperformed its sector by 2.06%, closing near its 52-week low at just 2.43% above the ₹1194.01 mark. Intraday, the stock touched a low of ₹1208, down 6.28% from the previous close, with heavier volumes traded near these lows, signalling selling pressure.

Technically, Coforge is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — which confirms a bearish trend across multiple time frames. This technical deterioration aligns with the surge in put option activity, as investors seek to hedge or capitalise on further downside risk.

Sector and Market Context

The broader IT - Software sector has also been under pressure, declining by 3.17% on the same day, while the Sensex fell by 0.82%. Coforge’s sharper decline relative to both the sector and benchmark index highlights company-specific concerns or profit-taking by investors. The stock’s market capitalisation stands at ₹41,523 crores, categorising it as a mid-cap stock with moderate liquidity.

Investor participation has risen notably, with delivery volumes on 23 February reaching 23.66 lakh shares, a 42.49% increase over the five-day average. This heightened activity suggests that institutional and retail investors alike are actively repositioning their holdings amid the prevailing uncertainty.

Mojo Score and Analyst Ratings Reflect Caution

Coforge currently holds a Mojo Score of 50.0 with a Mojo Grade of Hold, downgraded from Buy on 6 February 2026. This shift reflects a more cautious stance by analysts amid the recent price weakness and deteriorating technicals. The company’s market cap grade is 2, indicating moderate size and liquidity relative to peers.

Given the downgrade and the surge in put option activity, investors should carefully assess risk-reward dynamics before initiating fresh positions. The stock’s underperformance relative to the sector and the broader market suggests that downside risks remain elevated in the near term.

Expiry Patterns and Strike Price Concentration

The concentration of put option volumes at the ₹1220 strike price, which is near the current market price, is a classic sign of hedging or speculative bearish positioning ahead of expiry. Open interest data confirms that these positions are not fleeting but represent a build-up of downside protection or bearish bets.

Expiry day often brings heightened volatility as traders adjust or close positions. The heavy put activity at this strike price could lead to increased price sensitivity around ₹1220, with potential for sharp moves if the stock breaches this level decisively.

Investor Implications and Outlook

For investors, the current environment suggests caution. The combination of technical weakness, negative price momentum, and elevated put option activity points to a bearish near-term outlook. Those holding Coforge shares may consider protective strategies such as buying puts or tightening stop-loss levels to manage downside risk.

Conversely, contrarian investors might monitor for signs of capitulation or oversold conditions that could present buying opportunities. However, given the sector’s broader weakness and the stock’s recent underperformance, a wait-and-watch approach may be prudent until clearer directional cues emerge.

Comparative Sector Performance and Market Positioning

Within the Computers - Software & Consulting sector, Coforge’s recent performance contrasts with some peers that have managed to hold ground or recover from recent dips. The sector’s 3.17% decline on the day indicates broad weakness, but Coforge’s sharper fall of 5.36% highlights company-specific pressures or profit-booking.

Market participants should weigh Coforge’s fundamentals, including its mid-cap status and liquidity profile, against sector trends and macroeconomic factors affecting IT services demand. The stock’s current technical and options market signals suggest that downside risks are front and centre for the near term.

Conclusion: Elevated Put Activity Signals Caution

The surge in put option volumes at the ₹1220 strike price on expiry day, combined with Coforge’s sustained price weakness and technical deterioration, underscores a cautious market stance. Investors and traders are evidently positioning for potential further declines or volatility, using puts as a hedge or speculative tool.

While the stock remains liquid enough for sizeable trades, the downgrade to Hold and the negative momentum warrant careful risk management. Monitoring open interest and price action around key technical levels will be critical in the coming sessions to gauge whether the bearish trend will persist or if a reversal is on the horizon.

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