Hindustan Zinc Sees Surge in Put Option Activity Amid Bearish Market Sentiment

Heavy Put Option Trading Highlights Bearish Positioning

On 5 February 2026, Hindustan Zinc Ltd emerged as the most active stock in put options trading, with 4,253 contracts changing hands at the ₹600 strike price expiring on 24 February 2026. This volume translated into a turnover of approximately ₹1,392.6 lakhs, reflecting substantial investor interest in downside protection or speculative bearish bets. The open interest for these puts stood at 2,627 contracts, underscoring sustained demand for downside exposure.

The underlying stock price was ₹604.25 at the time, hovering just above the ₹600 strike, indicating that traders are positioning for a potential decline below this key psychological and technical level within the next three weeks. Such concentrated put activity often signals expectations of near-term weakness or increased volatility.

Price Action and Sectoral Context

Hindustan Zinc Ltd’s stock price has recently shown signs of strain. After three consecutive days of gains, the stock reversed sharply, opening with a gap down of -6.14% on 5 February and touching an intraday low of ₹593.25, a decline of 7.2% from the previous close. This underperformance was more pronounced than the broader non-ferrous metals sector, which fell by 4.97% on the same day, and the Sensex, which declined by 0.47%.

Despite the recent weakness, the stock remains above its 50-day, 100-day, and 200-day moving averages, suggesting that the medium- to long-term trend is still intact. However, it trades below its 5-day and 20-day moving averages, indicating short-term bearish momentum. This mixed technical picture may be contributing to the increased put option interest as investors hedge against further downside risk.

Investor Participation and Liquidity Considerations

Investor participation in Hindustan Zinc Ltd has notably diminished, with delivery volumes falling sharply by 75.66% to 32.07 lakh shares on 4 February compared to the five-day average. This decline in delivery volume suggests reduced conviction among buyers, potentially signalling profit-taking or cautious positioning ahead of earnings or sectoral developments.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting a trade size of approximately ₹44.7 crore based on 2% of the five-day average. This liquidity profile facilitates active options trading and allows institutional investors to implement hedging strategies efficiently.

Mojo Score and Rating Update

Hindustan Zinc Ltd currently holds a Mojo Score of 64.0, reflecting a moderate outlook with a Hold grade. This marks a downgrade from its previous Buy rating as of 1 February 2026, signalling a more cautious stance by analysts amid recent price weakness and sector headwinds. The company’s market capitalisation stands at a robust ₹2,54,998 crore, categorising it as a large-cap stock with significant institutional interest.

The downgrade aligns with the stock’s recent underperformance, which lagged the non-ferrous metals sector by 0.89% on the day of analysis. The shift in rating suggests that while the company’s fundamentals remain sound, near-term risks and valuation pressures warrant a more conservative approach.

Expiry Patterns and Strategic Implications

The concentration of put option activity at the ₹600 strike price for the 24 February expiry is particularly noteworthy. This strike is close to the current market price, making these options attractive for hedgers seeking protection against a moderate decline or for speculators anticipating a sharper drop. The expiry date, less than three weeks away, adds urgency to positioning decisions.

Such heavy put buying often precedes periods of increased volatility or correction, as market participants seek to mitigate downside risks. For Hindustan Zinc Ltd, this may reflect concerns over commodity price fluctuations, regulatory developments, or broader macroeconomic factors impacting the metals sector.

Sectoral and Market Outlook

The non-ferrous metals sector has faced pressure recently, with the index declining nearly 5% on the day of analysis. Factors such as fluctuating global metal prices, demand uncertainties from key consuming industries, and geopolitical tensions have contributed to the cautious mood. Hindustan Zinc Ltd’s performance and options activity mirror these sectoral challenges.

Investors should monitor upcoming earnings releases, commodity price trends, and policy announcements closely, as these will likely influence the stock’s trajectory and options market dynamics in the near term.

Investor Takeaways and Strategic Considerations

For investors currently holding Hindustan Zinc Ltd, the surge in put option activity and recent price weakness suggest a need for vigilance. The stock’s short-term technical indicators point to potential further downside or consolidation, while the downgrade to Hold advises caution.

Hedging strategies using put options at or near the ₹600 strike price may be prudent to protect gains or limit losses in volatile market conditions. Conversely, contrarian investors might view the elevated put interest as a potential contrarian signal, warranting close monitoring for signs of a reversal or oversold conditions.

Given the stock’s large-cap status and liquidity, institutional investors can efficiently implement such strategies. Retail investors should weigh the cost of options premiums against their risk tolerance and investment horizon.

Conclusion

Hindustan Zinc Ltd’s recent spike in put option volumes at the ₹600 strike price ahead of the 24 February expiry reflects growing bearish sentiment and hedging activity amid a challenging sectoral environment. The stock’s underperformance relative to its sector and the broader market, combined with a downgrade to Hold, underscores the cautious mood among investors.

Market participants should closely monitor price action, sector developments, and upcoming earnings to gauge the sustainability of the current trend. Strategic use of options may provide valuable risk management tools in navigating the near-term uncertainties surrounding this key non-ferrous metals player.

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