HCL Technologies Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 5 January 2026, HCL Technologies recorded 2,867 contracts traded for put options expiring on 27 January 2026 at the ₹1,600 strike price. This surge in activity generated a turnover of approximately ₹4.93 crores, reflecting significant investor interest in downside protection or speculative bearish bets. The open interest for these contracts stands at 894, indicating a substantial build-up of positions that could influence price dynamics as expiry approaches.

The underlying stock price closed near ₹1,596.7, just below the ₹1,600 strike, which is a critical psychological and technical level. The proximity of the spot price to the strike price of the most active puts suggests that traders are positioning for potential further declines or volatility in the near term.

Stock Performance and Technical Context

HCL Technologies underperformed its sector by 1.53% on the day, with a 1-day return of -2.65%, compared to the sector’s -1.83% and the Sensex’s marginal decline of -0.15%. The stock has reversed after three consecutive days of gains, touching an intraday low of ₹1,587.2, down 3.23% from the previous close. This reversal has raised concerns among investors about the sustainability of the recent rally.

Technically, the stock remains above its 100-day and 200-day moving averages, which typically indicate long-term support. However, it has slipped below the 5-day, 20-day, and 50-day moving averages, signalling short- to medium-term weakness. This mixed technical picture is likely contributing to the increased put option interest as traders seek to hedge or capitalise on potential downside risks.

Investor Participation and Liquidity

Investor participation has notably declined, with delivery volumes falling by 53.06% to 4.98 lakh shares on 2 January compared to the five-day average. This reduced participation may reflect caution among long-term holders amid the recent volatility. Despite this, liquidity remains adequate, with the stock’s traded value supporting transactions up to ₹5.49 crores based on 2% of the five-day average traded value, ensuring that option and stock trades can be executed without significant market impact.

Mojo Score and Market Capitalisation

HCL Technologies holds a Mojo Score of 72.0, categorised as a Buy, following a recent downgrade from Strong Buy on 24 December 2025. This adjustment reflects a tempered outlook amid the current market conditions and technical signals. The company’s market capitalisation stands at a robust ₹4,45,014 crores, placing it firmly in the large-cap segment within the Computers - Software & Consulting sector.

The stock also offers a relatively attractive dividend yield of 3.66%, which may provide some cushion for investors amid short-term price fluctuations. However, the recent decline and increased put option activity suggest that market participants are weighing downside risks more heavily at present.

Expiry Patterns and Investor Sentiment

The January 27 expiry date for the active put options is significant as it marks the end of the first month of the new calendar year, a period often characterised by portfolio rebalancing and strategic positioning. The concentration of put option contracts at the ₹1,600 strike price indicates that investors are focusing on this level as a key support or potential trigger point for further downside.

Such heavy put option activity can serve dual purposes: hedging existing long stock positions against a decline or speculating on a bearish move. Given the stock’s recent underperformance relative to its sector and the broader market, the latter appears increasingly plausible. The open interest data corroborates this, showing a build-up of bearish bets that could amplify volatility as expiry nears.

Implications for Investors and Traders

For investors, the surge in put option activity at the ₹1,600 strike price should be interpreted as a cautionary signal. While the stock’s long-term fundamentals remain intact, the near-term technical weakness and increased hedging suggest that downside risks are elevated. Investors may consider reviewing their exposure and employing protective strategies such as stop-loss orders or option-based hedges.

Traders, on the other hand, might find opportunities in the heightened volatility and liquidity in the options market. The active put contracts provide a means to speculate on further declines or to hedge against adverse price movements. Monitoring open interest changes and price action around the ₹1,600 level will be crucial in anticipating potential breakout or breakdown scenarios.

Sector and Market Context

The Computers - Software & Consulting sector has experienced mixed performance recently, with some stocks showing resilience while others face pressure from global macroeconomic uncertainties and technology spending cycles. HCL Technologies’ relative underperformance compared to its sector peers highlights the importance of stock-specific factors, including earnings outlook, client demand, and margin pressures.

Against the broader Sensex, which declined marginally by 0.15% on the day, HCL’s sharper fall underscores the stock-specific challenges it faces. Investors should continue to monitor sector trends and global IT spending patterns as these will influence HCL’s medium- to long-term trajectory.

Conclusion

The pronounced increase in put option trading for HCL Technologies at the ₹1,600 strike price ahead of the 27 January expiry reflects a growing bearish sentiment and hedging activity. Coupled with recent price weakness and technical signals, this suggests that investors are bracing for potential volatility or downside risk in the near term. While the company’s fundamentals and dividend yield offer some support, market participants should remain vigilant and consider appropriate risk management strategies as the expiry date approaches.

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