HDFC Bank Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Surge at Key Strike Prices

Data from the derivatives market reveals that HDFC Bank’s put options have been the most actively traded among stocks, with three strike prices—₹910, ₹920, and ₹930—dominating volumes. The highest activity was recorded at the ₹930 strike, where 10,957 contracts changed hands, generating a turnover of ₹682.79 lakhs and an open interest of 6,769 contracts. This is particularly notable given the underlying stock price of ₹928.45 as of 19 January 2026.

The ₹920 strike followed closely with 6,599 contracts traded, turnover of ₹263.14 lakhs, and open interest of 4,426 contracts. The ₹910 strike also saw substantial activity with 5,569 contracts traded and turnover of ₹139.36 lakhs, alongside an open interest of 3,086 contracts. The concentration of put option volumes around these strikes suggests that market participants are positioning for a potential downside or are actively hedging existing long exposures.

Expiry Patterns and Market Implications

The expiry date of 27 January 2026 is fast approaching, and the clustering of put option activity near the current market price indicates a heightened level of uncertainty. Traders often use put options as insurance against declines or to speculate on downward moves. The elevated open interest at these strikes implies that a significant number of investors are either betting on or protecting against a fall below the ₹930 to ₹910 range.

Given that HDFC Bank’s stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, technical indicators are signalling weakness. This technical backdrop, combined with the put option data, paints a picture of cautious sentiment among investors, who may be bracing for further downside or volatility in the near term.

Stock Performance and Sector Context

On 19 January 2026, HDFC Bank’s share price declined by 0.48%, underperforming the Sensex’s fall of 0.52% but outperforming the private sector banking sector’s average decline of 0.87%. Despite this relative resilience, the bank’s Mojo Score has been downgraded from a Buy to a Hold on 12 January 2026, reflecting a more cautious outlook. The current Mojo Score stands at 57.0, indicating a neutral stance on the stock’s near-term prospects.

Market cap remains robust at ₹14,28,227.23 crores, categorising HDFC Bank as a large-cap stock with strong liquidity. Delivery volumes have risen by 23% compared to the 5-day average, with 2.94 crore shares delivered on 16 January 2026, signalling increased investor participation. However, the stock’s trading below all major moving averages suggests that momentum is currently negative.

Investor Sentiment and Hedging Strategies

The heavy put option volumes at strikes close to the current price level suggest that investors are either hedging long positions or speculating on a near-term correction. Put options provide a form of downside protection, and the open interest data indicates that many market participants are actively managing risk amid uncertain macroeconomic conditions and sectoral headwinds.

HDFC Bank’s downgrade from Buy to Hold by MarketsMOJO on 12 January 2026 further corroborates the cautious stance. The downgrade reflects concerns over valuation pressures and potential earnings volatility in the private banking sector. Investors may be using put options to mitigate these risks, especially with the January expiry acting as a focal point for portfolio adjustments.

Technical Indicators and Market Liquidity

Technically, HDFC Bank’s share price trading below all major moving averages is a bearish signal, often interpreted as a sign of weakening momentum. The stock’s liquidity remains strong, with an average traded value sufficient to support trade sizes up to ₹64.11 crores, ensuring that option and equity market participants can enter and exit positions with relative ease.

The rising delivery volume, up 23% over the recent average, indicates that institutional investors are actively participating, possibly recalibrating their exposure in response to evolving market conditions. This heightened activity in both the cash and derivatives segments underscores the importance of monitoring HDFC Bank’s price action and option market dynamics closely in the coming days.

Outlook and Investor Considerations

With the January expiry imminent, investors should closely monitor the evolving open interest and volume patterns in HDFC Bank’s options. The concentration of put option activity near the current price level suggests that the market is bracing for potential volatility or a downside move. However, the stock’s large market capitalisation and strong liquidity provide some cushion against abrupt price swings.

Investors holding long positions may consider protective strategies such as buying puts or employing collars to limit downside risk. Conversely, traders with a bearish outlook might view the elevated put volumes as confirmation of a potential correction and position accordingly. The downgrade to Hold by MarketsMOJO advises caution, signalling that while the stock remains fundamentally strong, near-term headwinds could weigh on performance.

Overall, the interplay between technical weakness, increased put option activity, and cautious analyst sentiment suggests a period of consolidation or correction for HDFC Bank in the weeks ahead. Market participants should remain vigilant and use option market signals as part of a comprehensive risk management approach.

Summary

HDFC Bank Ltd. is currently experiencing the highest put option volumes among stocks, with significant activity clustered at ₹910, ₹920, and ₹930 strike prices expiring on 27 January 2026. This surge in put contracts, combined with the stock trading below all major moving averages and a recent downgrade to Hold, indicates growing bearish sentiment and hedging activity. Investors should carefully analyse these signals and consider appropriate risk mitigation strategies as the expiry date approaches.

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