Hindustan Zinc Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the derivatives market reveals that Hindustan Zinc Ltd witnessed robust put option trading with three key strike prices dominating volumes ahead of the 27 January 2026 expiry. The 600 strike price saw the highest number of contracts traded at 1,716, followed by 1,573 contracts at the 610 strike and 1,414 contracts at the 620 strike. These trades generated turnovers of ₹42.27 crores, ₹47.34 crores, and ₹51.12 crores respectively, underscoring substantial investor interest in downside protection or speculative bearish bets.

Open interest figures further reinforce this trend, with the 600 strike price holding the largest open interest of 2,187 contracts, indicating sustained positioning at this level. The 620 and 610 strikes have open interests of 1,092 and 654 contracts respectively, suggesting that traders are actively managing risk or positioning for a potential price correction in the near term.

Stock Price Context and Technical Positioning

Hindustan Zinc’s underlying stock price closed at ₹617.40 on 31 December 2025, marginally below the 620 and 610 put strikes but above the 600 strike. The stock underperformed its sector by 0.47% on the day, registering a 1.26% decline compared to the sector’s 0.76% fall and the Sensex’s modest 0.17% gain. Intraday, the stock touched a low of ₹610.30, reflecting some selling pressure.

Technically, the stock remains above its 20-day, 50-day, 100-day, and 200-day moving averages, signalling medium- to long-term strength. However, it trades below its 5-day moving average, indicating short-term weakness or consolidation. This mixed technical picture may be prompting investors to hedge their positions with put options or speculate on a near-term pullback.

Investor Participation and Liquidity

Delivery volumes have declined notably, with 38.51 lakh shares delivered on 30 December 2025, down 25.38% from the five-day average. This drop in investor participation could be a sign of caution or profit-booking ahead of the expiry. Despite this, liquidity remains adequate, with the stock’s traded value supporting sizeable trades up to ₹20.31 crores comfortably, ensuring that option market activity is backed by a liquid underlying.

Mojo Score and Analyst Ratings

Hindustan Zinc currently holds a Mojo Score of 65.0, placing it in the ‘Hold’ category, an upgrade from its previous ‘Sell’ rating as of 9 October 2025. This reflects a moderate outlook on the stock’s near-term prospects, balancing its strong market capitalisation of ₹2,60,892.32 crores and sector leadership against recent price underperformance and volatility.

The company’s Market Cap Grade is 1, indicating its status as a large-cap stock with significant institutional interest. However, the recent downgrade in daily price performance relative to the sector and Sensex suggests that investors are increasingly cautious, possibly explaining the surge in put option activity as a hedge or speculative tool.

Expiry Patterns and Market Implications

The concentration of put option volumes at strikes close to the current market price and the January expiry date is noteworthy. January expiries often attract heightened activity as investors recalibrate portfolios for the new calendar year. The elevated open interest at the 600 strike price, which is approximately 2.8 points below the current price, signals that traders are bracing for a potential downside move or are seeking insurance against a correction.

Such positioning can also be interpreted as a protective measure by long investors to limit losses in case of adverse price movements. Alternatively, speculative traders may be betting on a decline, anticipating sectoral or macroeconomic headwinds impacting non-ferrous metals prices and, by extension, Hindustan Zinc’s earnings.

Sector and Market Context

Hindustan Zinc operates within the Non-Ferrous Metals sector, which has experienced mixed performance amid fluctuating commodity prices and global demand uncertainties. The sector’s 1-day return of -0.76% on 31 December 2025 contrasts with the Sensex’s slight gain, highlighting sector-specific pressures. This environment may be contributing to the cautious stance reflected in derivatives markets.

Investors should monitor upcoming quarterly results, global zinc price trends, and macroeconomic indicators closely, as these factors will influence the stock’s trajectory and option market dynamics in the weeks ahead.

Investor Takeaway

The pronounced put option activity in Hindustan Zinc Ltd ahead of the January expiry is a clear signal of increased bearish sentiment or prudent hedging by market participants. While the stock’s medium- and long-term technical indicators remain supportive, short-term pressures and sectoral headwinds warrant caution.

Investors holding long positions should consider the implications of rising open interest in puts as a risk management tool, while traders looking to capitalise on volatility may find opportunities in the derivatives market. Close attention to zinc price movements, quarterly earnings, and broader market trends will be essential to navigate the evolving landscape effectively.

Summary

In summary, Hindustan Zinc Ltd’s derivatives market activity reveals a nuanced picture of investor sentiment. The heavy put option volumes at strikes near the current price, combined with a recent upgrade to a ‘Hold’ rating and mixed technical signals, suggest a market preparing for potential volatility. This makes the stock a focal point for traders and investors seeking to balance growth prospects with risk mitigation in the non-ferrous metals sector.

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