Hindustan Zinc Sees Heavy Put Option Activity Amid Bearish Sentiment

Heavy Put Option Volumes Concentrated Near Current Levels

Data from the derivatives market reveals that Hindustan Zinc’s put options expiring on 27 January 2026 have attracted substantial interest, with the 600 strike price leading the pack. This strike alone saw 7,789 contracts traded, generating a turnover of ₹1,898.76 lakhs and an open interest of 4,828 contracts. This level is particularly notable given the stock’s underlying value of ₹602.55, indicating that traders are actively positioning for a potential downside move around current price levels.

Other strike prices with significant put activity include 610 (2,982 contracts traded, ₹881.82 lakhs turnover, 955 open interest), 620 (2,396 contracts, ₹866.15 lakhs turnover, 1,641 open interest), and 580 (3,364 contracts, ₹520.47 lakhs turnover, 1,333 open interest). The clustering of put trades around these strikes suggests a broad-based hedging strategy or outright bearish bets from market participants anticipating further weakness.

Stock Performance and Sector Context

Hindustan Zinc has underperformed its sector and the broader market in recent sessions. The stock declined by 4.92% on 8 January 2026, touching an intraday low of ₹599.25, and has fallen 6.31% over the last two trading days. This compares with a 4.29% drop in the non-ferrous metals sector and a marginal 0.17% decline in the Sensex on the same day, underscoring the stock’s relative weakness.

Despite the recent sell-off, the stock remains above its 20-day, 50-day, 100-day, and 200-day moving averages, though it trades below its 5-day moving average, indicating short-term bearish momentum amid longer-term support levels. Investor participation has risen, with delivery volumes on 7 January reaching 33.63 lakh shares, a 20.24% increase over the five-day average, reflecting heightened trading interest amid volatility.

Mojo Score Upgrade Reflects Mixed Outlook

MarketsMOJO’s latest assessment upgraded Hindustan Zinc’s mojo grade from Sell to Hold on 9 October 2025, with a mojo score of 65.0. This reflects a cautious stance, balancing the company’s large market capitalisation of ₹2,54,216.32 crore and sector fundamentals against recent price weakness and volatility. The market cap grade remains at 1, indicating the stock’s large-cap status but also signalling limited upside momentum in the near term.

The downgrade in short-term price action contrasts with the stock’s longer-term technical positioning, suggesting investors are hedging their exposure amid uncertainty in the non-ferrous metals space, which has been impacted by fluctuating commodity prices and global demand concerns.

Expiry Patterns and Investor Behaviour

The concentration of put option activity around the 600 strike price, which is close to the current market price, indicates that investors are either hedging existing long positions or speculating on a decline below this level before the January expiry. The sizeable open interest of 4,828 contracts at this strike further confirms that this is a key level watched by traders.

Lower strike prices such as 580 also show robust put volumes, suggesting some investors are bracing for a more pronounced correction. The turnover figures, especially the ₹1,898.76 lakhs at the 600 strike, highlight the significant capital being deployed in these bearish strategies.

Open interest data reveals that while the 600 strike dominates, the 620 and 580 strikes maintain meaningful positions, indicating a range of bearish sentiment across different price points. This pattern is typical of hedging strategies that seek to protect against downside risk while allowing for some price flexibility.

Sectoral Impact and Broader Market Implications

The non-ferrous metals sector has been under pressure, with a 4.29% decline on 8 January 2026, reflecting concerns over global commodity cycles and demand outlook. Hindustan Zinc’s sharper fall of nearly 5% on the same day underscores its vulnerability to sectoral headwinds and investor risk aversion.

Given the stock’s liquidity—capable of handling trade sizes up to ₹9.56 crore based on recent average traded value—it remains an active choice for institutional and retail traders alike. The rising delivery volumes suggest that investors are actively repositioning their portfolios, possibly increasing hedges or reducing exposure amid uncertain market conditions.

Investor Takeaway: Navigating Hedging and Bearish Sentiment

For investors in Hindustan Zinc Ltd, the surge in put option activity signals a cautious market stance. The heavy volumes and open interest at strikes near and below the current price point suggest that market participants are either protecting gains or speculating on further downside. This is consistent with the stock’s recent underperformance relative to its sector and the broader market.

While the mojo grade upgrade to Hold indicates some stabilisation, the technical indicators and option market data counsel prudence. Investors should closely monitor price action around the ₹600 level, which appears to be a critical support zone. Breach of this level could trigger further downside, while a rebound may alleviate some bearish pressures.

Given the stock’s liquidity and active derivatives market, traders have ample opportunity to implement hedging strategies or speculative positions. However, the prevailing sentiment suggests that downside risk remains elevated in the near term, especially as the 27 January expiry approaches.

Overall, Hindustan Zinc’s option market activity provides a valuable barometer of investor sentiment, highlighting the importance of integrating derivatives data into equity analysis for a comprehensive market view.

Looking Ahead

As the expiry date nears, market participants will be watching for shifts in open interest and volume across strike prices to gauge changes in sentiment. Any significant unwinding of put positions or increased call buying could signal a turnaround, while sustained or rising put activity would reinforce bearish expectations.

Investors should also consider broader sector dynamics and commodity price trends, which will continue to influence Hindustan Zinc’s performance. Staying informed on these factors alongside derivatives market signals will be crucial for making well-rounded investment decisions.

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