HDFC Bank Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the derivatives market reveals that HDFC Bank’s put options with a strike price of ₹900 expiring on 30 March 2026 have emerged as the most actively traded contracts. A total of 4,363 contracts changed hands, generating a turnover of approximately ₹27.02 crores. The open interest stands at 4,992 contracts, indicating sustained interest and potential accumulation of bearish bets or protective hedges by market participants.

The underlying stock price currently hovers around ₹908.95, just above the ₹900 strike, suggesting that traders are positioning for a possible downside move or seeking insurance against further declines. This activity is particularly significant given the stock’s recent price action and technical indicators.

Price Performance and Technical Context

HDFC Bank has underperformed its sector by 0.32% today and has recorded a consecutive two-day decline, losing 1.59% over this period. The stock has traded within a narrow range of ₹7.35, reflecting subdued volatility but persistent selling pressure. Notably, the share price is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — a technical signal often interpreted as bearish momentum building up.

Investor participation has risen, with delivery volumes on 24 February reaching 1.77 crore shares, a 56.08% increase compared to the five-day average. This heightened activity suggests that investors are either offloading positions or actively hedging existing exposures amid uncertainty.

Liquidity remains robust, with the stock’s traded value supporting sizeable transactions up to ₹43.14 crores based on 2% of the five-day average traded value, ensuring that option and stock trades can be executed efficiently without significant price impact.

Mojo Score and Analyst Ratings

HDFC Bank currently holds a Mojo Score of 48.0, categorised as a Sell rating by MarketsMOJO. This represents a downgrade from its previous Hold grade on 9 February 2026, reflecting deteriorating fundamentals or technical outlook. The bank’s market capitalisation stands at a substantial ₹13,96,592.17 crores, classifying it firmly as a large-cap stock, but its Market Cap Grade is rated at 1, indicating limited upside potential relative to peers.

The downgrade and bearish sentiment are consistent with the increased put option activity, as investors appear to be positioning defensively or speculating on further downside. The stock’s day change of -0.47% today further underscores the cautious mood prevailing among traders.

Expiry Patterns and Investor Behaviour

The expiry date of 30 March 2026 is attracting significant attention, with put options at the ₹900 strike price dominating volumes. This strike is close to the current market price, making it a critical level for traders to watch. The elevated open interest suggests that many investors are either buying puts to hedge long stock positions or selling puts as part of more complex strategies, such as spreads or collars, to manage risk.

Given the stock’s recent technical weakness and the broader banking sector’s mixed performance, the surge in put option interest may also reflect concerns about macroeconomic factors, regulatory changes, or earnings prospects that could weigh on HDFC Bank’s near-term outlook.

Comparative Sector and Market Performance

While HDFC Bank has declined by 0.33% in the last trading session, the private sector banking sector has gained 0.15%, and the Sensex benchmark index has advanced 0.41%. This relative underperformance highlights the stock’s vulnerability amid a generally positive market environment, further justifying the bearish positioning observed in options markets.

Investors should note that the stock’s technical indicators and option market signals suggest caution. The combination of falling prices, trading below key moving averages, and heavy put option volumes at a near-the-money strike price points to a risk of further downside or at least heightened volatility in the coming weeks.

Investor Implications and Outlook

For investors holding HDFC Bank shares, the current environment suggests prudence. The increased put option activity at the ₹900 strike price can be interpreted as a warning signal, indicating that market participants are either hedging against potential declines or speculating on a correction. Those with long positions may consider protective strategies such as buying puts or tightening stop-loss levels to manage downside risk.

Conversely, traders with a bearish outlook might view the elevated open interest and turnover in put options as an opportunity to capitalise on expected volatility or price weakness. However, given the stock’s liquidity and large market capitalisation, any significant move will likely be influenced by broader sectoral trends and macroeconomic developments.

It is also important to monitor upcoming corporate announcements, quarterly results, and policy changes that could impact HDFC Bank’s fundamentals and investor sentiment. The current downgrade to a Sell rating by MarketsMOJO reflects these uncertainties and the need for careful analysis before initiating fresh positions.

Conclusion

HDFC Bank’s recent surge in put option trading, particularly at the ₹900 strike expiring on 30 March 2026, underscores a growing bearish sentiment and hedging activity among investors. The stock’s underperformance relative to its sector and key technical indicators supports this cautious stance. While the bank remains a large-cap heavyweight with significant market presence, the current signals advise investors to remain vigilant and consider risk management strategies amid an uncertain near-term outlook.

As always, a balanced approach combining fundamental analysis with technical and derivatives market insights will be essential for navigating the evolving landscape of HDFC Bank’s stock performance.

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