HDFC Bank Ltd Sees Heavy Call Option Activity Amid Bearish Mojo Grade

Call Option Activity Highlights

On the expiry date of 24 February 2026, HDFC Bank’s call options at the ₹940 strike price emerged as the most actively traded contracts. A total of 3,040 contracts exchanged hands, generating a turnover of ₹2.0064 lakhs. The open interest at this strike stood at 6,778 contracts, indicating sustained interest and potential bullish positioning among options traders. This activity is notable given the underlying stock price of ₹923.5, suggesting that market participants are anticipating a possible upward move beyond the ₹940 level by expiry.

Such concentrated call option volumes often signal speculative optimism or hedging strategies by institutional players. However, the strike price being modestly out-of-the-money implies that traders are positioning for a moderate rally rather than an aggressive breakout. The expiry pattern also aligns with typical monthly option expiry dynamics, where traders adjust positions ahead of contract settlement.

Stock Price and Technical Context

HDFC Bank’s share price has traded within a narrow range of ₹6.45 on the day, reflecting subdued volatility. The stock closed marginally lower by 0.09%, slightly underperforming its sector’s 0.07% decline but outperforming the broader Sensex, which fell 0.89%. Technical indicators reveal a mixed picture: the price remains above the 5-day moving average but below the 20-day, 50-day, 100-day, and 200-day averages. This suggests short-term support but longer-term resistance, indicating consolidation rather than a clear trend direction.

Investor participation has notably increased, with delivery volumes on 23 February rising by 61.37% compared to the five-day average, reaching 1.75 crore shares. This heightened activity underscores growing interest in the stock, possibly driven by the option market dynamics and broader sectoral movements.

Liquidity remains robust, with the stock’s traded value supporting trade sizes up to ₹39.9 crore based on 2% of the five-day average traded value. This ensures that both institutional and retail investors can execute sizeable trades without significant market impact.

Fundamental Assessment and Mojo Grade Downgrade

Despite the bullish undertone in the options market, MarketsMOJO downgraded HDFC Bank’s Mojo Grade from Hold to Sell on 9 February 2026, assigning a Mojo Score of 48.0. This rating reflects concerns over the bank’s near-term fundamentals and valuation metrics. The Market Cap Grade remains at 1, indicating the stock’s large-cap status but also signalling limited upside potential relative to peers.

The downgrade suggests that while the bank maintains its dominant position in the private sector banking industry, challenges such as margin pressures, asset quality concerns, or macroeconomic headwinds may weigh on its performance. Investors should weigh these fundamental factors against the speculative optimism evident in the derivatives market.

Sector and Market Comparison

HDFC Bank’s performance today was broadly in line with the private sector banking sector, which saw a marginal decline of 0.07%. The broader market, represented by the Sensex, experienced a sharper fall of 0.89%, indicating relative resilience in banking stocks. However, the narrow trading range and subdued price movement suggest a cautious stance among investors amid mixed signals.

Technically, the stock’s position below key moving averages points to resistance levels that may cap near-term gains. The rising delivery volumes and active call option interest, however, indicate that some market participants are positioning for a potential rebound or a breakout above the ₹940 strike price.

Investor Implications and Outlook

For investors, the heavy call option activity at the ₹940 strike price signals a degree of optimism about HDFC Bank’s near-term prospects. However, the recent downgrade and technical resistance levels counsel caution. The stock’s narrow trading range and mixed moving average signals suggest that a decisive move will be required to confirm a sustained uptrend.

Given the bank’s large-cap stature and critical role in the private banking sector, it remains a key stock to watch. Yet, investors should consider the broader macroeconomic environment, sectoral trends, and the bank’s fundamental performance before increasing exposure. The divergence between derivatives market optimism and fundamental caution highlights the complexity of the current investment landscape.

In summary, while call option traders are positioning for a potential upside, the overall market sentiment as reflected in the Mojo Grade and technical indicators advises prudence. Monitoring open interest trends, expiry dynamics, and fundamental updates will be essential for making informed decisions on HDFC Bank Ltd.

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