HDFC Bank Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 7 January 2026, HDFC Bank’s put options with a strike price of ₹950 and expiry date of 27 January 2026 emerged as the most actively traded contracts in the segment. A total of 2,549 contracts changed hands, generating a turnover of approximately ₹24.25 crores. The open interest for these puts stands at 5,802 contracts, indicating sustained interest and potential build-up of bearish bets or protective hedges.

The underlying stock price hovered around ₹949.65, just below the ₹950 strike, which is a psychologically significant level for traders. This proximity often encourages speculative and hedging activity, as investors seek to protect gains or capitalise on potential downside moves.

Technical and Market Context

HDFC Bank’s price action on the day was largely in line with its sector peers, registering a modest 0.17% gain compared to the sector’s 0.01% rise and the Sensex’s 0.17% decline. However, the stock is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup that may be prompting cautious positioning.

Investor participation has notably increased, with delivery volumes on 7 January reaching 5.1 crore shares, a sharp 294.42% rise over the five-day average. This surge in volume suggests heightened interest and possibly increased hedging activity as investors brace for near-term volatility.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹55.58 crores comfortably, ensuring that option market participants can execute sizeable positions without significant market impact.

Investor Sentiment and Hedging Implications

The surge in put option volume at the ₹950 strike price suggests that investors are either hedging existing long positions or speculating on a potential downside correction. Given the stock’s current trading below all key moving averages, the technical outlook remains cautious.

HDFC Bank’s Mojo Score stands at 72.0 with a current Mojo Grade of Buy, a slight downgrade from a previous Strong Buy rating as of 7 January 2026. This adjustment reflects a tempered optimism amid recent price action and sector dynamics. The bank’s market capitalisation remains substantial at ₹14,62,534.83 crores, underscoring its status as a large-cap heavyweight in the private banking sector.

While the stock has not recorded consecutive falls recently, the technical indicators and option market activity point to a cautious stance among traders. The elevated open interest in puts could also indicate that some investors are positioning for volatility ahead of the expiry, possibly due to macroeconomic factors or sector-specific developments.

Expiry Patterns and Strategic Considerations

The 27 January 2026 expiry date is critical, as it marks the culmination of this heightened put option activity. Traders will be closely monitoring price movements around the ₹950 strike, which acts as a key support/resistance level in the options chain.

Given the liquidity and volume metrics, the options market for HDFC Bank remains efficient and responsive, allowing investors to implement a range of strategies from outright bearish bets to protective hedges. The current environment suggests a preference for downside protection, possibly reflecting broader market uncertainties or profit-booking after recent gains.

Comparative Sector and Market Analysis

Within the private sector banking space, HDFC Bank’s option activity stands out due to its sheer volume and open interest. While the sector has shown marginal gains, the bank’s trading below all major moving averages contrasts with the broader sector’s modest positive returns, signalling a divergence that investors should monitor closely.

Compared to the Sensex’s 0.17% decline on the same day, HDFC Bank’s slight positive return of 0.17% indicates relative resilience. However, the option market’s bearish undertones suggest that investors are hedging against potential volatility or downside risks that may not yet be fully reflected in the spot price.

Outlook and Investor Takeaways

For investors and traders, the current put option activity in HDFC Bank offers valuable insights into market sentiment and risk management strategies. The concentration of open interest at the ₹950 strike price ahead of the 27 January expiry highlights a critical price level to watch.

While the Mojo Grade remains a Buy, the downgrade from Strong Buy and the technical positioning below key moving averages counsel caution. Investors should consider the implications of increased put buying as a signal to review portfolio hedges or reassess risk exposure in the banking sector.

Overall, HDFC Bank’s option market dynamics reflect a nuanced balance between confidence in the bank’s fundamentals and prudence in the face of near-term uncertainties. Monitoring open interest trends and expiry outcomes will be essential for informed decision-making in the coming weeks.

Summary

HDFC Bank Ltd. is currently experiencing significant put option activity, particularly at the ₹950 strike price with expiry on 27 January 2026. This surge in bearish positioning or hedging coincides with the stock trading below all major moving averages and a recent downgrade in its Mojo Grade from Strong Buy to Buy. Elevated delivery volumes and strong liquidity underpin active investor participation, while the broader sector and market trends suggest cautious optimism. Investors should closely watch the upcoming expiry and price action around the key strike to gauge future directional bias.

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