HCL Technologies Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On the expiry date of 24 Feb 2026, HCL Technologies recorded significant put option volumes at the ₹1,360 and ₹1,380 strike prices. The ₹1,380 strike saw the highest number of contracts traded at 4,334, generating a turnover of ₹116.5 lakhs, while the ₹1,360 strike followed with 3,612 contracts and a turnover of ₹63.3 lakhs. Open interest at these strikes stood at 231 and 535 contracts respectively, indicating sustained investor interest in downside protection or speculative bearish bets.

The underlying stock price at the time was ₹1,369.3, placing these strikes close to the money and reflecting a strategic positioning by traders anticipating further downside or volatility around these levels.

Stock Performance and Technical Context

HCL Technologies has underperformed its sector and the broader market in recent sessions. The stock declined by 4.16% on the day, underperforming the IT - Software sector’s fall of 3.12% and the Sensex’s modest 0.89% drop. Over the past five trading days, the stock has lost 7.39%, marking a consecutive decline that has pressured investor sentiment.

Intraday, the stock touched a low of ₹1,371.6, down 3.83%, and is currently trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup. This persistent weakness has likely contributed to the surge in put option interest as market participants seek downside protection or position for further declines.

Investor Participation and Liquidity

Investor engagement remains robust despite the downtrend, with delivery volumes rising to 16.87 lakh shares on 23 Feb 2026, a 28.9% increase over the five-day average. This heightened participation suggests that while some investors are exiting or hedging, others may be accumulating at lower levels or repositioning their portfolios.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transaction sizes up to ₹7.57 crore based on 2% of the five-day average. This ensures that option and equity traders can execute strategies without significant market impact.

Mojo Score and Analyst Ratings

HCL Technologies currently holds a Mojo Score of 65.0, reflecting a Hold rating, a downgrade from its previous Buy grade as of 9 Feb 2026. The downgrade signals a cautious stance by analysts amid the stock’s recent underperformance and sector headwinds. The company’s market capitalisation stands at a substantial ₹3,87,064 crore, categorising it as a large-cap stock with a Market Cap Grade of 1, indicating high liquidity and institutional interest.

Despite the bearish technical signals, the stock offers a relatively attractive dividend yield of 3.79%, which may provide some income cushion for long-term investors amid volatility.

Sectoral and Market Context

The broader IT - Software sector has been under pressure, falling 3.12% on the day, reflecting concerns over global demand, margin pressures, and currency fluctuations. HCL Technologies’ sharper decline relative to its peers suggests company-specific factors or more pronounced investor risk aversion.

Given the sector’s current weakness and the stock’s technical breakdown, the surge in put option volumes can be interpreted as a combination of hedging by existing shareholders and speculative positioning by traders anticipating further downside or volatility ahead of the expiry.

Expiry Patterns and Investor Behaviour

The expiry date of 24 Feb 2026 has attracted concentrated put option activity at strikes near the current market price, a common pattern when investors seek to hedge short-term downside risk or speculate on price falls. The higher turnover at the ₹1,380 strike compared to ₹1,360 suggests a preference for slightly out-of-the-money puts, which offer a balance between cost and protection.

Open interest data indicates that while some positions may be closing, new contracts are being established, pointing to ongoing bearish sentiment or hedging demand. This dynamic is typical in volatile or weakening markets where investors aim to protect gains or limit losses.

Implications for Investors

For investors, the heightened put option activity at near-the-money strikes signals a cautious outlook on HCL Technologies in the short term. Those holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk. Conversely, traders with a bearish bias might view the current option volumes as confirmation of potential further declines, presenting opportunities for directional trades.

Long-term investors should weigh the company’s fundamental strengths, including its large market cap, dividend yield, and sector positioning, against the prevailing technical weakness and market uncertainties. The recent downgrade to Hold by analysts underscores the need for careful monitoring of upcoming earnings, sector developments, and global IT demand trends.

Conclusion

HCL Technologies Ltd’s recent surge in put option volumes at the ₹1,360 and ₹1,380 strikes ahead of the 24 Feb 2026 expiry reflects growing bearish sentiment and hedging activity amid a sustained downtrend. The stock’s underperformance relative to its sector and technical breakdown below key moving averages reinforce the cautious stance adopted by investors and analysts alike. While the company’s fundamentals and dividend yield offer some support, the current market environment suggests that prudent risk management and close attention to price action remain essential for stakeholders.

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