ICICI Bank Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Surge Reflects Growing Bearish Interest

On 5 January 2026, ICICI Bank’s put options with an expiry date of 27 January 2026 at the ₹1,370 strike price emerged as the most actively traded contracts in the market. A total of 5,944 contracts changed hands, generating a turnover of approximately ₹781.40 lakhs. The open interest for these puts stands at 2,181 contracts, indicating sustained investor interest in downside protection or speculative bearish bets.

The underlying stock price at the time was ₹1,373.90, placing the ₹1,370 strike price almost at-the-money. This proximity suggests that traders are positioning for a potential near-term correction or increased volatility around this level.

Stock Performance and Technical Context

Despite the heavy put activity, ICICI Bank’s stock has demonstrated resilience in recent sessions. It outperformed its sector by 1.67% on the day, with a 1.34% gain compared to the sector’s 0.26% decline and a marginal 0.02% rise in the Sensex. The stock has recorded gains over the last two consecutive days, delivering a 2.73% return in this period.

Technically, the share price is trading above its 5-day, 20-day, and 50-day moving averages, signalling short- to medium-term strength. However, it remains below the 100-day and 200-day moving averages, which may be interpreted as a longer-term resistance zone. This mixed technical picture could be contributing to the cautious stance reflected in the options market.

Investor participation has also increased, with delivery volumes rising to 58.34 lakh shares on 2 January, a 20.7% increase compared to the five-day average. Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹24.09 crore based on 2% of the five-day average traded value.

Mojo Score and Analyst Ratings Signal Caution

ICICI Bank currently holds a Mojo Score of 48.0, categorised as a 'Sell' grade by MarketsMOJO, reflecting a downgrade from its previous 'Hold' rating on 15 December 2025. The bank’s market cap grade is 1, indicating its status as a large-cap stock with significant market presence but also highlighting valuation concerns or risk factors influencing the downgrade.

This rating shift aligns with the increased put option activity, suggesting that market participants and analysts alike are adopting a more cautious outlook on the stock’s near-term prospects.

Expiry Patterns and Investor Strategies

The concentration of put option trades at the 27 January 2026 expiry date is notable. January expiries often attract heightened activity as investors adjust portfolios for the new calendar year and respond to macroeconomic developments. The choice of the ₹1,370 strike price, close to the current market price, indicates a preference for protective puts or speculative bets on a moderate decline rather than deep out-of-the-money hedges.

Such positioning can be interpreted as a hedge against potential downside risks stemming from sectoral headwinds, regulatory changes, or broader market volatility. It may also reflect profit-booking or risk management by institutional investors following recent gains.

Sector and Market Context

Within the private sector banking industry, ICICI Bank remains a dominant player with a market capitalisation of ₹9,78,427 crore. However, the sector has faced mixed sentiments amid tightening monetary policies and evolving credit conditions. The bank’s recent outperformance relative to its sector peers is encouraging but tempered by the cautious tone in options markets and analyst downgrades.

Investors should weigh these factors carefully, considering both the bank’s fundamental strengths and the technical signals from derivatives markets.

Investor Takeaway: Balancing Opportunity and Risk

For investors, the current scenario presents a nuanced picture. The stock’s recent gains and technical support levels suggest underlying strength, yet the surge in put option activity and the downgrade to a 'Sell' grade caution against complacency. The options market is signalling a hedging mindset or anticipation of volatility, which could manifest as price corrections or sideways movement in the near term.

Prudent investors may consider monitoring open interest trends and expiry dynamics closely, while also evaluating alternative private sector banking stocks with stronger mojo scores or more favourable analyst ratings. Diversification and risk management remain key in navigating the evolving landscape.

Overall, ICICI Bank’s put option activity offers valuable insight into market sentiment, highlighting the importance of integrating derivatives data with fundamental and technical analysis for a comprehensive investment approach.

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