HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 29 January 2026, HDFC Bank Ltd. (NSE: HDFCBANK) emerged as the most active stock in put options trading, with 3,082 contracts exchanged at the 930 strike price expiring on 24 February 2026. This activity generated a turnover of ₹305.118 lakhs and an open interest of 4,302 contracts, reflecting significant investor interest in downside protection or speculative bearish bets.

The underlying stock price stood at ₹926.80, slightly below the strike price, indicating that traders are positioning for a potential decline or at least hedging against downside risk in the near term. The concentration of put options at this strike suggests a key psychological and technical level for market participants.

Price and Trend Analysis

HDFC Bank’s share price has recently reversed after two consecutive days of gains, trading within a narrow range of ₹8.35 on 29 January. The stock closed with a 1-day return of -0.67%, underperforming both its sector, which declined by 0.25%, and the broader Sensex, which fell 0.56% on the same day.

Technical indicators reveal a mixed picture: the stock price remains above its 5-day moving average but below the 20-day, 50-day, 100-day, and 200-day moving averages. This suggests short-term support but longer-term resistance, reinforcing the cautious stance among investors.

Investor participation has risen, with delivery volumes reaching 2.66 crore shares on 28 January, a 6.62% increase compared to the five-day average. Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹71.53 crore based on 2% of the five-day average traded value.

Fundamental and Market Context

HDFC Bank Ltd. operates in the private sector banking industry and is classified as a large-cap stock with a market capitalisation of ₹14,27,132 crore. Despite its size and market leadership, the company’s current Mojo Score stands at 48.0, with a Mojo Grade of Sell, downgraded from Hold on 28 January 2026. This downgrade reflects deteriorating sentiment and a cautious outlook from analysts.

The bank’s market cap grade is 1, indicating its dominant position in the market, but the recent downgrade and increased put option activity suggest investors are wary of near-term headwinds, possibly linked to sectoral challenges or broader macroeconomic concerns.

Investor Sentiment and Hedging Strategies

The heavy put option volume at the 930 strike price, just above the current market price, indicates that investors are either hedging existing long positions or speculating on a decline. The open interest of 4,302 contracts suggests that this is not a fleeting trend but a sustained positioning ahead of the February expiry.

Put options serve as insurance against price drops, and the elevated activity here may reflect concerns about potential sectoral headwinds, regulatory changes, or macroeconomic uncertainties impacting private sector banks. The stock’s recent underperformance relative to the Sensex and sector further corroborates this cautious stance.

Expiry Patterns and Market Implications

The 24 February 2026 expiry date is significant as it falls just before the end of the financial year, a period often marked by portfolio rebalancing and strategic adjustments by institutional investors. The concentration of put options at this strike price may signal expectations of volatility or a correction in the near term.

Market participants should monitor open interest trends and price movements closely in the coming weeks to gauge whether bearish sentiment intensifies or if a reversal emerges. The interplay between technical resistance levels and fundamental factors will be crucial in determining the stock’s trajectory.

Comparative Performance and Outlook

While HDFC Bank remains a stalwart in the private banking sector, its recent downgrade to a Sell rating by MarketsMOJO and the surge in bearish option activity suggest that investors are increasingly cautious. The Mojo Score of 48.0 is below the neutral threshold, reflecting concerns over earnings momentum, asset quality, or competitive pressures.

Compared to its sector peers, which have shown more resilience, HDFC Bank’s underperformance and technical indicators point to a potential consolidation phase or correction. Investors should weigh these factors carefully, considering both the bank’s long-term fundamentals and the near-term risks highlighted by options market dynamics.

Strategic Considerations for Investors

Given the current environment, investors holding HDFC Bank shares may consider protective strategies such as buying put options to hedge downside risk. Conversely, traders with a bearish outlook might view the elevated put option volumes as an opportunity to capitalise on potential declines.

It is also prudent to monitor upcoming quarterly results, regulatory announcements, and macroeconomic developments that could influence the bank’s performance and investor sentiment. The interplay of these factors will likely dictate the stock’s direction into the February expiry and beyond.

Conclusion

The surge in put option activity for HDFC Bank Ltd. at the 930 strike price ahead of the 24 February 2026 expiry underscores a growing bearish sentiment and cautious positioning among investors. Coupled with a recent downgrade to a Sell rating and technical indicators signalling resistance, the stock faces near-term headwinds despite its large-cap stature and market leadership.

Market participants should remain vigilant, balancing the bank’s fundamental strengths against the risks highlighted by options market behaviour and price trends. Strategic hedging and comparative analysis with sector peers may be essential for navigating the evolving landscape.

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