Hindalco Industries Sees Surge in Put Option Activity Amid Bearish Sentiment

Intense Put Option Trading Highlights Bearish Outlook

Data from the derivatives market shows that Hindalco’s put options have been the most actively traded among its peers, with three strike prices attracting significant volumes. The 880 strike price saw the highest number of contracts traded at 4,866, followed by the 890 strike with 3,953 contracts, and the 900 strike with 3,650 contracts. This concentrated activity in puts, particularly at strikes slightly above the current underlying value of ₹884.10, suggests that traders are positioning for a potential downside or are seeking protection against further declines.

The turnover for these put options is substantial, with ₹619.843 lakhs at the 900 strike, ₹514.957 lakhs at 890, and ₹477.209 lakhs at 880. Open interest figures reinforce this trend, with 2,026 contracts open at the 900 strike and 1,732 at 880, indicating sustained interest and possible accumulation of bearish bets as expiry approaches.

Price Performance and Technical Context

Hindalco’s stock price has been under pressure, falling by 2.02% on the day of data capture and registering a five-day consecutive decline totalling an 8.61% loss. The stock touched an intraday low of ₹884, reflecting the bearish sentiment evident in the options market. While the share price remains above its 100-day and 200-day moving averages, it is trading below the shorter-term 5-day, 20-day, and 50-day averages, signalling near-term weakness despite longer-term support levels.

The Aluminium & Aluminium Products sector, to which Hindalco belongs, has also experienced a downturn, with a sectoral decline of 2.43% on the same day. This broader sector weakness compounds the challenges faced by Hindalco, as global commodity prices and demand dynamics continue to influence investor sentiment.

Investor Participation and Liquidity Considerations

Investor engagement in Hindalco remains robust, with delivery volumes rising to 42.61 lakh shares on 16 February 2026, a 33.7% increase over the five-day average. This heightened participation underscores the stock’s liquidity, which comfortably supports trade sizes of up to ₹12.41 crore based on 2% of the five-day average traded value. Such liquidity is crucial for institutional investors and traders looking to execute sizeable positions or hedge existing exposures.

Mojo Score and Rating Revision Reflect Caution

MarketsMOJO’s latest assessment assigns Hindalco a Mojo Score of 61.0, categorising it as a Hold. This represents a downgrade from a previous Buy rating issued on 18 November 2025, signalling a more cautious stance amid recent price weakness and sector headwinds. The company’s Market Cap Grade remains at 1, consistent with its large-cap status and ₹1,98,823.37 crore market capitalisation.

The downgrade aligns with the observed options market activity, where increased put buying often precedes or accompanies a period of price consolidation or decline. Investors should weigh this alongside fundamental factors and sector trends when considering their exposure.

Expiry Patterns and Strategic Implications

The put options expiring on 24 February 2026 are attracting the bulk of activity, indicating that traders are focusing on near-term risk management or speculative positioning. The clustering of open interest and turnover around strike prices 880 to 900, just above the current market price, suggests a hedging strategy to protect against further downside or a speculative bet on a price correction.

Such patterns are typical in volatile or uncertain market phases, where investors seek to limit losses or capitalise on expected declines. The relatively high open interest at these strikes also implies that any significant price movement below these levels could trigger further option-related activity, potentially amplifying volatility.

Balancing Risks and Opportunities for Investors

While the surge in put option activity signals caution, it also presents opportunities for investors with a nuanced view of Hindalco’s prospects. The stock’s position above its long-term moving averages suggests underlying support, and any sector recovery or improvement in global aluminium demand could provide a catalyst for price rebound.

However, the recent downgrade and sustained price weakness highlight the need for careful risk management. Investors should monitor open interest trends and expiry dynamics closely, as these can offer early indications of shifts in market sentiment or potential price inflection points.

Given the stock’s liquidity and active options market, sophisticated investors can employ a range of strategies, from protective puts to spread trades, to navigate the current environment effectively.

Conclusion

Hindalco Industries Ltd is currently at a crossroads, with its options market revealing a pronounced bearish tilt ahead of the 24 February 2026 expiry. The heavy put option volumes and open interest at strikes near the current price reflect investor caution and hedging activity amid a challenging sector backdrop and recent price declines. While the stock retains some technical support and remains a large-cap heavyweight, the downgrade to Hold and sectoral pressures warrant a measured approach.

Investors should remain vigilant to evolving market signals and consider the broader macroeconomic and commodity trends that influence Hindalco’s performance. The options market activity serves as a valuable barometer of sentiment, underscoring the importance of integrating derivatives data into comprehensive investment analysis.

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