Mphasis Ltd Falls 3.23%: 4 Key Factors Driving the Weekly Decline

23 February: Death Cross Formation and Rising Open Interest

On 23 Feb 2026, Mphasis Ltd’s stock price declined sharply by 2.72% to close at Rs.2,309.05, underperforming the Sensex which gained 0.39% that day. This day marked the formation of a Death Cross, a significant technical indicator where the 50-day moving average crossed below the 200-day moving average, signalling a potential shift to a bearish trend. This technical development reflected deteriorating momentum and raised concerns about the stock’s medium to long-term outlook.

Simultaneously, the derivatives market showed a notable 11.5% surge in open interest, rising from 34,177 to 38,100 contracts. Despite the price weakness, futures volume was robust at 32,609 contracts, with a combined derivatives turnover of approximately ₹85,065 lakhs. This divergence between rising open interest and falling prices suggested fresh short positions or increased hedging activity, indicating market participants were positioning for further downside or volatility.

24 February: Continued Price Decline Amidst Further Open Interest Surge

The downward trend intensified on 24 Feb 2026, with the stock price plunging 3.66% to Rs.2,224.50, significantly underperforming the Sensex’s 0.78% decline. Open interest surged again by 19.3% to 37,826 contracts, accompanied by a daily volume of 38,130 contracts in the derivatives segment. The notional value of options alone reached ₹15,717 crores, underscoring heightened speculative interest.

Technically, Mphasis was trading below all key moving averages, reinforcing the bearish outlook. Despite the price drop, delivery volumes increased sharply by 99.13% on 23 Feb, indicating rising investor participation even amid the downtrend. This combination of rising open interest and falling prices typically signals increased short positioning or bearish bets, reflecting growing conviction among traders about further downside risk.

24 February: Technical Momentum Shifts to Bearish Signals

On the same day, technical momentum indicators confirmed a pronounced bearish shift. The Moving Average Convergence Divergence (MACD) was bearish on the weekly chart and mildly bearish monthly, signalling dominant selling pressure. Bollinger Bands indicated increased volatility with the stock trading near the lower band, suggesting continued downward pressure.

Moving averages remained firmly above the stock price, reinforcing the downtrend. The Know Sure Thing (KST) indicator aligned with bearish weekly momentum, while Dow Theory presented mixed signals with mildly bullish weekly but mildly bearish monthly perspectives. On-Balance Volume (OBV) was inconclusive weekly but mildly bearish monthly, indicating volume-based selling pressure over the longer term.

Relative Strength Index (RSI) readings were neutral, implying room for further downside before oversold conditions might emerge. Overall, these technical signals underscored the deteriorating price momentum and heightened caution among investors.

25 to 27 February: Stabilisation Attempts Amid Mixed Market Sentiment

From 25 to 27 Feb 2026, Mphasis showed tentative signs of stabilisation. The stock gained 1.58% on 25 Feb to Rs.2,259.70 and marginally rose 0.11% on 26 Feb to Rs.2,262.15. On 27 Feb, it further advanced 1.53% to close at Rs.2,296.80. Despite these gains, the stock remained below key moving averages and continued to underperform the Sensex, which itself declined 1.16% on 27 Feb.

Volume during these days was moderate, with a notable drop on 26 Feb to 8,714 shares traded. The partial recovery in price did not yet signal a reversal of the bearish trend but suggested some short-term buying interest or technical bounce within a broader downtrend.

Key Takeaways

Bearish Technical Signals: The formation of the Death Cross and sustained trading below all major moving averages confirm a bearish momentum shift. MACD, Bollinger Bands, and KST indicators reinforce this negative trend, while neutral RSI readings suggest further downside potential before oversold conditions emerge.

Derivatives Market Activity: Sharp increases in open interest by 11.5% and 19.3% on consecutive days amid falling prices indicate fresh short positions and heightened speculative interest. Elevated options notional values highlight active put buying or call writing strategies, signalling market expectations of continued volatility or decline.

Price Underperformance: Mphasis declined 3.23% over the week, significantly underperforming the Sensex’s 0.96% fall. The stock’s weakness was more pronounced than the broader IT sector, reflecting company-specific challenges and cautious investor sentiment.

Rating Downgrade and Market Cap Considerations: The downgrade from Hold to Sell and a Mojo Score of 38.0 underline deteriorating fundamentals and technical outlook. The mid-cap status with a Market Cap Grade of 2 suggests susceptibility to sharper price swings and speculative trading.

Conclusion

Mphasis Ltd’s week was dominated by bearish technical developments and increased derivatives market activity signalling heightened downside risk. The Death Cross formation and sustained price weakness below key moving averages confirm a shift in momentum, while rising open interest amid falling prices points to growing bearish positioning among traders. Despite minor price recoveries late in the week, the stock remains vulnerable to further declines, especially given its underperformance relative to the Sensex and sector peers.

Investors should exercise caution and closely monitor technical support levels and derivatives trends. The recent downgrade to a Sell rating and the prevailing negative momentum suggest that Mphasis may face continued pressure in the near term. While the stock’s strong historical performance over the past decade remains notable, current signals favour a defensive stance until clearer signs of stabilisation or reversal emerge.

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