Indus Towers Sees Heavy Put Option Activity Amid Bullish Price Momentum

Put Option Activity Highlights

On 1 January 2026, Indus Towers Ltd (stock code: 433635), a major player in the Telecom - Equipment & Accessories industry, recorded the most active put options on the National Stock Exchange. The put options with a strike price of ₹420, expiring on 27 January 2026, saw 2,652 contracts traded, generating a turnover of ₹30.52 crores. Open interest for these contracts stands at 2,303, indicating sustained interest in downside protection or speculative bearish bets.

The underlying stock price at the time was ₹435.5, trading above the ₹420 strike, which implies that these puts are currently out-of-the-money but could gain value if the stock price declines. The high volume and open interest in these puts reflect a strategic positioning by market participants, possibly as a hedge against potential near-term volatility or a bearish outlook on the stock’s short-term trajectory.

Stock Performance and Market Context

Indus Towers has been on an impressive run, hitting a new 52-week high of ₹439.7 intraday on the same day, marking a 5% gain. The stock outperformed its sector by 1.34% and the broader Sensex by 4.3 percentage points, with a daily return of 4.41% compared to the sector’s 3.34% and Sensex’s 0.11%. This rally follows a two-day correction, signalling a potential trend reversal supported by strong investor participation.

Delivery volumes surged to 59.45 lakh shares on 31 December 2025, a 141.51% increase over the five-day average, underscoring heightened investor interest. The stock is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — reinforcing its bullish technical stance. The telecom equipment sector itself gained 3.31% on the day, buoyed by positive sentiment around infrastructure demand and network expansion.

Mojo Score and Analyst Ratings

MarketsMOJO assigns Indus Towers a Mojo Score of 67.0, categorising it as a 'Hold' with a recent upgrade from a 'Sell' rating on 7 November 2025. Despite the upgrade, the stock’s Market Cap Grade remains at 1, reflecting its large-cap status with a market capitalisation of ₹1,12,399 crores. The rating change suggests improving fundamentals or technical outlook, but the presence of heavy put option activity indicates that some investors remain cautious or are seeking downside protection.

Interpreting the Put Option Surge

The concentration of put option activity at the ₹420 strike price, which is roughly 3.5% below the current market price, suggests that traders are positioning for a potential pullback or are hedging existing long positions. The expiry date of 27 January 2026 is just under four weeks away, indicating that market participants expect any significant price movement to materialise within this timeframe.

Put options serve as insurance against price declines or as speculative instruments betting on downward moves. The sizeable turnover of ₹30.52 crores and open interest of 2,303 contracts reflect a meaningful level of bearish sentiment or risk management. This is particularly notable given the stock’s recent strong performance and technical strength.

Sector and Market Implications

The telecom equipment sector, while currently buoyant, faces headwinds from global supply chain disruptions and competitive pressures. Investors may be using put options on Indus Towers to hedge against sector-specific risks or broader market volatility. The stock’s liquidity, with a 5-day average traded value supporting trade sizes up to ₹6.84 crores, facilitates active options trading and efficient price discovery.

Moreover, the divergence between the stock’s bullish technical indicators and the heavy put option activity highlights a nuanced market view. While the trend remains upward, cautious investors are preparing for potential corrections or profit-taking in the near term.

Investor Takeaways and Outlook

For investors, the current scenario presents a mixed picture. Indus Towers’ strong technical momentum and recent upgrade to a 'Hold' rating by MarketsMOJO indicate improving fundamentals and positive medium-term prospects. However, the pronounced put option activity signals that market participants are wary of near-term risks, possibly due to macroeconomic uncertainties or sector-specific challenges.

Investors should monitor the stock’s price action closely as the 27 January expiry approaches, paying attention to any shifts in open interest and volume in both call and put options. A sustained decline below the ₹420 strike could trigger increased put option value and confirm a bearish trend, while a breakout above recent highs may reduce downside hedging demand.

Given the stock’s liquidity and active options market, traders can employ various strategies to capitalise on volatility or hedge exposures effectively. Long-term investors may consider the current put option activity as a cautionary signal to review portfolio allocations and risk management frameworks.

Conclusion

Indus Towers Ltd’s recent surge in put option trading underscores a complex market sentiment where bullish price action coexists with heightened hedging and bearish positioning. While the stock remains technically strong and enjoys a sizeable market capitalisation, the options market reveals investor caution ahead of the January expiry. This dynamic warrants close observation for those invested in the telecom equipment sector or seeking to navigate the evolving risk landscape.

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