Mphasis Ltd Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Heavy Put Option Activity Highlights Investor Sentiment

On 19 February 2026, Mphasis Ltd. emerged as the most active stock in put options trading, with 3,481 contracts exchanged at the 2,300 strike price for the expiry date of 24 February 2026. The turnover for these put options reached ₹250.04 lakhs, underscoring substantial investor interest in hedging or speculating on a decline. Open interest currently stands at 1,070 contracts, indicating sustained bearish positioning as expiry approaches.

The underlying stock price at the time was ₹2,343, placing the 2,300 strike put options slightly out-of-the-money but within a range that traders consider critical for downside protection. This activity suggests that market participants are bracing for a potential correction or increased volatility in Mphasis shares over the coming week.

Price Performance and Technical Weakness

Mphasis has been on a downward trajectory, losing 5.08% over the past three trading sessions. On 19 February, the stock touched an intraday low of ₹2,321.2, marking a 2.34% decline for the day and underperforming its sector by 0.82%. The stock’s 1-day return was -1.41%, compared to the sector’s -0.63% and the Sensex’s modest 0.07% gain, highlighting relative weakness.

Technically, Mphasis is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a bearish trend across multiple timeframes. This comprehensive technical deterioration has likely contributed to the increased demand for put options as investors seek downside protection or to capitalise on further declines.

Declining Investor Participation and Liquidity Considerations

Investor participation appears to be waning, with delivery volume on 19 February falling by 51.23% to 2.34 lakh shares compared to the 5-day average. This decline in delivery volume suggests reduced conviction among buyers, potentially exacerbating downward pressure on the stock price.

Despite this, liquidity remains adequate, with the stock’s traded value supporting a trade size of approximately ₹3.8 crore based on 2% of the 5-day average traded value. This level of liquidity ensures that option traders and investors can execute sizeable trades without significant market impact.

Mojo Score and Analyst Ratings Reflect Caution

Mphasis currently holds a Mojo Score of 44.0, categorised as a Sell grade, a downgrade from its previous Hold rating as of 1 February 2026. This shift reflects deteriorating fundamentals and technicals, signalling caution to investors. The company’s market capitalisation stands at ₹44,675.39 crore, placing it firmly in the mid-cap segment within the Computers - Software & Consulting industry.

The market cap grade of 2 further emphasises the stock’s mid-tier status, which may contribute to heightened volatility and sensitivity to sectoral and macroeconomic developments. Investors should weigh these factors carefully when considering exposure to Mphasis.

Expiry Patterns and Strategic Implications for Traders

The concentration of put option activity at the 2,300 strike price for the 24 February expiry suggests that traders are positioning for a near-term correction or seeking to hedge existing long positions. The open interest of 1,070 contracts indicates that this strike price is a key level of interest, potentially serving as a support benchmark in the coming days.

Given the stock’s recent underperformance and technical weakness, the elevated put option volumes may also reflect speculative bearish bets aiming to capitalise on further downside. Market participants should monitor price action closely around this strike level and expiry date to gauge the evolving sentiment.

Sectoral Context and Comparative Performance

Within the Computers - Software & Consulting sector, Mphasis’s recent underperformance contrasts with some peers that have maintained relative stability or modest gains. The sector’s 1-day return of -0.63% is less severe than Mphasis’s -1.41%, highlighting the stock’s vulnerability amid broader industry trends.

Investors may consider this divergence when evaluating portfolio allocations, particularly given the company’s current Sell rating and technical challenges. The sector’s overall health and growth prospects remain important factors in assessing Mphasis’s medium-term outlook.

Investor Takeaway and Outlook

In summary, the pronounced surge in put option activity for Mphasis Ltd. ahead of the 24 February expiry underscores a cautious or bearish stance among investors. The stock’s technical weakness, recent price declines, and downgrade to a Sell rating reinforce the need for prudence.

Traders and investors should closely monitor the 2,300 strike price as a critical level, as well as the stock’s price action relative to key moving averages. Those holding long positions may consider protective strategies, while speculative traders might find opportunities in the heightened volatility and directional bets.

Given the mid-cap nature of Mphasis and its sectoral dynamics, market participants are advised to maintain a balanced approach, factoring in both the risks and potential for recovery depending on broader market conditions and company-specific developments.

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