HDFC Bank Sees Heavy Call Option Activity Ahead of January Expiry

Call Option Activity Highlights

Data from the derivatives market reveals that HDFC Bank’s call options expiring on 27 January 2026 have attracted substantial volumes, particularly at strike prices of ₹930, ₹940, and ₹950. The most actively traded call option was at the ₹930 strike, with 9,931 contracts changing hands, generating a turnover of approximately ₹375.24 lakhs. This was closely followed by the ₹950 strike, which saw 6,110 contracts traded, and the ₹940 strike with 6,044 contracts.

Open interest figures further underscore the interest in these strikes, with the ₹950 call option holding the highest open interest at 19,450 contracts, indicating a strong build-up of positions at this level. The ₹930 and ₹940 strikes also maintain robust open interest of 13,510 and 12,995 contracts respectively. These numbers suggest that market participants are positioning for a potential upward move in the stock price, betting on a recovery or a rally beyond the current underlying value of ₹922.65.

Price and Technical Context

Despite the bullish positioning in the options market, HDFC Bank’s spot price has been under pressure. The stock has declined by 0.63% in the last trading session, underperforming its sector by 0.27% and the broader Sensex by 0.13%. Over the past two days, the stock has lost 1.04% in value, reflecting a cautious sentiment among equity investors.

Technically, HDFC Bank is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a bearish trend in the short to medium term. This technical weakness contrasts with the active call option interest, which may indicate speculative bets or hedging strategies by institutional investors anticipating a turnaround.

Investor participation has been rising, with delivery volumes reaching 2.7 crore shares on 19 January 2026, a 6.95% increase over the five-day average. This heightened activity suggests that while the stock price is under pressure, there remains considerable interest in accumulating shares at current levels.

Mojo Score and Rating Update

HDFC Bank currently holds a mojo score of 60.0, categorised as a 'Hold' rating by MarketsMOJO, reflecting a cautious stance on the stock. This represents a downgrade from its previous 'Buy' rating as of 12 January 2026. The downgrade is likely influenced by the recent price weakness and technical indicators, despite the bank’s strong fundamentals and large market capitalisation of ₹14,27,073 crore.

The market cap grade remains at 1, indicating HDFC Bank’s status as a large-cap stock with significant liquidity and institutional interest. The stock’s liquidity profile supports sizeable trade volumes, with an average traded value sufficient to accommodate trade sizes up to ₹64.19 crore based on 2% of the five-day average traded value.

Expiry Patterns and Market Sentiment

The expiry date of 27 January 2026 is approaching rapidly, and the concentration of call option activity at strikes above the current price suggests that traders are positioning for a potential rebound in the final week of the expiry cycle. The ₹950 strike, in particular, stands out with the highest open interest, signalling a key resistance level that market participants expect the stock to challenge or surpass.

However, the disparity between the bearish price trend and bullish option positioning may also indicate hedging by institutional investors or speculative plays by traders anticipating volatility. The elevated turnover in call options, especially at the ₹930 strike, points to active trading strategies aimed at capitalising on short-term price movements.

Implications for Investors

For investors, the current scenario presents a mixed picture. The active call option interest at strikes above the current market price indicates optimism about a potential recovery or rally in HDFC Bank’s shares. However, the technical weakness and recent price underperformance counsel caution, suggesting that the stock may face resistance in the near term.

Investors should closely monitor price action around the ₹930 to ₹950 levels, which appear to be critical zones for the stock’s immediate trajectory. The elevated open interest at these strikes could lead to increased volatility as expiry approaches, offering both opportunities and risks for traders and long-term holders alike.

Given the downgrade to a 'Hold' rating and the current mojo score, a prudent approach would be to weigh the bank’s strong fundamentals against the technical headwinds and market sentiment before making fresh commitments.

Sector and Market Context

HDFC Bank operates within the private sector banking industry, a segment that has shown resilience but also faces challenges from macroeconomic factors and regulatory changes. The sector’s 1-day return of -0.31% and the Sensex’s -0.50% decline on the same day reflect a broadly cautious market environment.

In this context, HDFC Bank’s relative underperformance by 0.27% against its sector peers highlights the need for investors to consider alternative opportunities within the banking space or other sectors that may offer better risk-reward profiles.

Conclusion

In summary, HDFC Bank Ltd. is currently experiencing heavy call option activity ahead of the 27 January 2026 expiry, signalling bullish positioning despite recent price weakness and a mojo rating downgrade. The concentration of open interest at ₹930 and ₹950 strikes suggests that traders are anticipating a potential rebound, although technical indicators remain bearish.

Investors should remain vigilant to price movements and expiry dynamics, balancing the bank’s strong market presence and liquidity against near-term risks. The evolving options landscape offers insights into market expectations, which, combined with fundamental analysis, can guide informed investment decisions.

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