Hindustan Aeronautics Ltd Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the options market reveals that HAL's put options expiring on 24 February 2026 have attracted significant volumes, with three strike prices dominating the activity. The 4,000 strike saw the highest number of contracts traded at 5,717, generating a turnover of ₹625.15 lakhs and an open interest of 2,465 contracts. Close behind, the 4,200 strike recorded 4,226 contracts traded, turnover of ₹975.64 lakhs, and open interest of 2,318. The 4,100 strike also saw substantial activity with 2,827 contracts traded, turnover of ₹447.20 lakhs, and open interest of 1,311.

These strike prices are clustered around the current underlying value of ₹4,215.20, indicating that traders are positioning for potential downside risks in the near term. The concentration of put options at these levels suggests a defensive stance, either as outright bearish bets or as hedges against existing long positions.

Price Performance and Technical Context

HAL's stock price has underperformed its sector peers, declining by 6.00% on the day and lagging the aerospace and defence sector by 6.47%. The stock touched an intraday low of ₹4,097.60, down 8.34%, with the weighted average traded price skewed towards the lower end of the day's range. This price action is consistent with the increased put option interest, reflecting investor apprehension.

Technically, HAL is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. The falling investor participation, evidenced by a 3.58% decline in delivery volume to 7.7 lakh shares on 3 February compared to the five-day average, further underscores weakening conviction among buyers.

Market Capitalisation and Quality Assessment

With a market capitalisation of ₹2,99,073 crores, HAL remains a large-cap heavyweight in the aerospace and defence sector. However, its current Mojo Score stands at 50.0 with a Mojo Grade of Hold, upgraded from Sell on 3 February 2026. Despite this upgrade, the stock’s Market Cap Grade remains at 1, reflecting limited momentum and quality metrics relative to peers.

Investor Sentiment and Hedging Implications

The pronounced put option volumes at strikes just below and near the current market price indicate a cautious or bearish outlook among market participants. Investors may be using these puts to hedge against further downside risks amid the stock’s recent weakness and sector headwinds. The open interest figures suggest that these positions are not merely speculative but represent meaningful hedging or directional bets.

Given the expiry date of 24 February 2026, the coming weeks will be critical in determining whether the bearish sentiment materialises into sustained price declines or if the stock stabilises. The heavy put activity could also imply that traders expect increased volatility around this expiry, potentially driven by sector developments or broader market conditions.

Comparative Sector and Market Performance

HAL’s 1-day return of -5.67% contrasts sharply with the aerospace and defence sector’s modest gain of 0.12% and the Sensex’s 0.23% rise. This divergence highlights company-specific challenges or profit-taking pressures that are not affecting the broader sector or market indices. Investors should weigh these factors carefully when considering exposure to HAL, especially given the stock’s current technical weakness and mixed fundamental signals.

Liquidity and Trading Considerations

The stock remains sufficiently liquid, with a 5-day average traded value supporting trade sizes up to ₹21.55 crores based on 2% of average volume. This liquidity facilitates active trading and option strategies, allowing investors to implement hedges or speculative positions with relative ease.

Outlook and Investor Takeaways

While the recent upgrade from Sell to Hold by MarketsMOJO reflects some improvement in HAL’s fundamentals or valuation, the prevailing market dynamics suggest caution. The heavy put option activity, combined with technical weakness and underperformance relative to sector and market benchmarks, points to a cautious near-term outlook.

Investors should monitor the evolution of open interest and price action as the 24 February expiry approaches. Those holding long positions may consider protective hedges given the evident bearish positioning, while speculative traders might find opportunities in volatility arising from these dynamics.

Overall, HAL remains a large-cap stalwart in aerospace and defence, but current market signals advise a measured approach, balancing the company’s strategic importance against short-term risks and sector uncertainties.

Unlock special upgrade rates for a limited period. Start Saving Now →