Infosys Sees Heavy Put Option Activity Amid Bearish Sentiment and Hedging Ahead of March Expiry

Put Option Activity Highlights

On 4 March 2026, Infosys recorded the highest put option volume among active stocks, with 3,803 contracts traded at the ₹1300 strike price expiring on 30 March 2026. This activity generated a turnover of approximately ₹65.49 crores (654.8766 lakhs), reflecting significant investor interest in downside protection or speculative bearish bets. Open interest in these puts stands at 5,122 contracts, underscoring sustained positioning rather than transient trading.

The underlying stock price closed at ₹1,314.0, just 3.46% above its 52-week low of ₹1,264.1, indicating that the market is hovering near critical support levels. The put strike price of ₹1300 is slightly below the current market price, suggesting that traders are positioning for a potential decline or increased volatility in the coming weeks.

Stock Price and Market Context

Infosys outperformed its sector on the day, registering a 1.81% gain compared to the sector’s 0.26% rise and the broader Sensex’s 1.89% decline. The stock touched an intraday high of ₹1,315.6, a 2.07% increase, yet remains below its 20-day, 50-day, 100-day, and 200-day moving averages, signalling a mixed technical outlook. The 5-day moving average is currently the only short-term average the stock is trading above, indicating some recent positive momentum but longer-term resistance.

Investor participation appears to be waning, with delivery volume on 2 March falling by 64.28% against the 5-day average, down to 37.07 lakh shares. This decline in delivery volume may reflect reduced conviction among buyers or a wait-and-watch approach amid uncertain market conditions.

Infosys offers a relatively attractive dividend yield of 3.58% at the current price, which may provide some support to the stock amid volatility. Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹48.21 crores, ensuring ease of entry and exit for institutional and retail investors alike.

Mojo Score and Analyst Ratings

Infosys currently holds a Mojo Score of 57.0, placing it in the 'Hold' category, a downgrade from its previous 'Buy' rating as of 9 February 2026. This adjustment reflects a more cautious stance by analysts, likely influenced by the recent technical signals and option market activity. The company’s market cap grade remains at 1, indicating its status as a large-cap stock with significant market presence and liquidity.

Implications of Put Option Surge

The heavy put option volume at the ₹1300 strike price suggests that investors are either hedging existing long positions or speculating on a potential downside move. Given the stock’s proximity to its 52-week low and the mixed technical indicators, this bearish positioning is understandable. Put options provide a cost-effective way to protect portfolios against declines or to capitalise on expected volatility.

Open interest data confirms that this is not merely a short-term spike but a sustained build-up of bearish sentiment. The expiry date of 30 March 2026 is just weeks away, which may lead to increased volatility as traders adjust their positions ahead of expiry.

Sector and Market Comparison

Within the Computers - Software & Consulting sector, Infosys’s performance contrasts with the broader market’s negative trend, as the Sensex declined by 1.89% on the same day. This relative outperformance may be attributed to the company’s strong fundamentals and dividend yield, which continue to attract investors despite near-term uncertainties.

However, the downgrade in Mojo Grade and the surge in put option activity indicate that market participants are factoring in potential headwinds, including sectoral challenges or broader macroeconomic risks that could impact IT services demand.

Investor Takeaways and Outlook

For investors, the current environment suggests a cautious approach towards Infosys. The combination of a downgraded rating, significant put option activity, and technical resistance levels advises prudence. Those holding long positions may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk.

Conversely, the stock’s attractive dividend yield and relative outperformance within its sector could appeal to income-focused investors willing to tolerate short-term volatility. The liquidity profile supports active trading strategies, allowing nimble investors to capitalise on price swings.

Looking ahead, the expiry on 30 March 2026 will be a key date to monitor for shifts in option positioning and price action. Should the stock breach the ₹1300 level decisively, further downside could be expected, potentially attracting additional put buying. Alternatively, a rebound above key moving averages could alleviate bearish sentiment and restore confidence.

Conclusion

Infosys Ltd’s recent surge in put option trading at the ₹1300 strike price ahead of the March expiry highlights a growing bearish sentiment and hedging activity among market participants. While the stock shows resilience relative to its sector and the broader market, technical and options market signals counsel caution. Investors should weigh the company’s solid fundamentals and dividend yield against the risks implied by option market positioning and recent rating downgrades.

Active monitoring of open interest trends, price movements, and sector developments will be essential for making informed investment decisions in the near term.

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