Open Interest and Volume Dynamics
On 4 Feb 2026, Mphasis recorded an open interest of 24,400 contracts, up from 21,630 the previous day, marking an increase of 2,770 contracts or 12.81%. This rise in OI was accompanied by a volume of 13,831 contracts, indicating robust trading activity. The futures segment alone accounted for a value of approximately ₹24,523 lakhs, while options contributed a staggering ₹7,939.87 crores, culminating in a total derivatives value of ₹25,910.98 lakhs. Such figures underscore the intense speculative interest in Mphasis derivatives amid a volatile market backdrop.
Interestingly, the underlying stock price closed at ₹2,625, having opened with a gap down of 2.19% and touched an intraday low of ₹2,615.1, representing a steep 7.24% decline. The weighted average price of traded volumes clustered near the day’s low, signalling selling pressure. Moreover, Mphasis traded below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — reinforcing the bearish technical outlook.
Market Positioning and Directional Bets
The surge in open interest amid falling prices typically indicates fresh short positions or increased hedging activity. Given Mphasis’s 6.78% day-on-day price drop, the rise in OI suggests that traders are either intensifying bearish bets or protecting existing long positions through derivatives. The IT - Software sector itself declined by 6.25%, with Mphasis marginally underperforming the sector by 0.98%, reflecting sector-wide headwinds impacting investor sentiment.
Delivery volumes on 3 Feb 2026 rose sharply to 3.67 lakh shares, a 49.59% increase over the five-day average, signalling rising investor participation despite the negative price action. This divergence between rising delivery volumes and falling prices may indicate institutional accumulation at lower levels or strategic repositioning ahead of anticipated sectoral or company-specific developments.
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Technical and Fundamental Context
Mphasis’s current Mojo Score stands at 44.0 with a Mojo Grade of Sell, downgraded from Hold on 1 Feb 2026. This downgrade reflects deteriorating fundamentals or weakening technical indicators, which may have contributed to the recent price weakness and increased derivative activity. The company’s market capitalisation is ₹50,059.37 crores, placing it firmly in the mid-cap category, with a Market Cap Grade of 2, indicating moderate liquidity and market interest.
Trading liquidity remains adequate, with the stock’s average traded value supporting a trade size of ₹2.52 crores based on 2% of the five-day average traded value. This liquidity level facilitates sizeable institutional trades and derivative positions without excessive market impact.
Implications for Investors and Traders
The combination of rising open interest, increased volume, and a sharp price decline suggests that market participants are actively repositioning in Mphasis derivatives. The data points to a predominance of bearish sentiment or protective hedging strategies, possibly anticipating further downside or volatility in the near term. Investors should closely monitor changes in OI alongside price action to gauge the strength and conviction behind these moves.
Given the stock’s underperformance relative to the IT sector and its technical weakness below all major moving averages, cautious investors may consider reducing exposure or employing hedging strategies. Conversely, contrarian traders might view the elevated delivery volumes and rising participation as a potential accumulation phase, warranting close observation for any signs of reversal or fundamental improvement.
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Sector and Broader Market Context
The IT - Software sector’s 6.25% decline on the day reflects broader concerns such as global macroeconomic uncertainties, currency fluctuations, and potential margin pressures. Mphasis’s sharper decline relative to the sector and Sensex’s near-flat performance (-0.02%) highlights stock-specific challenges or profit-taking by investors.
Derivative market activity often precedes or amplifies underlying stock moves. The surge in open interest and volume in Mphasis derivatives may indicate that traders are positioning for continued volatility or a directional move, possibly influenced by upcoming earnings, contract wins, or sectoral developments.
Outlook and Strategic Considerations
With the current Mojo Grade at Sell and technical indicators signalling weakness, investors should exercise caution. Monitoring open interest trends, volume spikes, and price action in the coming sessions will be critical to discerning whether the recent surge in derivatives activity represents capitulation, hedging, or aggressive short positioning.
Long-term investors may await confirmation of fundamental improvements or a stabilisation in technical trends before increasing exposure. Traders, meanwhile, could explore derivative strategies aligned with the prevailing bearish bias, such as buying puts or initiating short futures positions, while managing risk prudently.
Overall, the sudden open interest increase in Mphasis derivatives amid a falling stock price and sector weakness underscores a market environment marked by uncertainty and repositioning. This scenario demands vigilant analysis and adaptive strategies from market participants.
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