Mphasis Ltd. Sees Sharp Open Interest Surge Amid Bearish Market Momentum

Open Interest and Volume Dynamics

The open interest (OI) in Mphasis derivatives rose from 21,630 contracts to 24,526 contracts, an absolute increase of 2,896 contracts. This 13.39% jump in OI was accompanied by a futures volume of 15,649 contracts, indicating robust trading activity. The total futures value stood at approximately ₹26,810 lakhs, while the options segment exhibited an extraordinarily high notional value of ₹9,068.75 crores, underscoring significant speculative interest in options strategies.

Such a surge in OI, especially when paired with a declining stock price, often points to fresh short positions being initiated or existing shorts being augmented. The weighted average price during the session was closer to the intraday low of ₹2,615.1, which was down 7.24% from the previous close, suggesting that sellers dominated the trading day.

Price Action and Moving Averages

Mphasis opened with a gap down of 2.19% and closed the day with a loss of 6.29%, mirroring the broader IT - Software sector’s decline of 6.28%. The stock is currently trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a sustained downtrend. This technical backdrop reinforces the bearish sentiment among market participants.

Investor participation has notably increased, with delivery volumes rising by nearly 50% to 3.67 lakh shares on 3 Feb 2026 compared to the five-day average. This heightened delivery volume suggests that investors are either liquidating holdings or repositioning amid the negative price momentum.

Market Positioning and Sentiment Analysis

The sharp increase in open interest amid falling prices suggests that traders are positioning for further downside or hedging existing long exposures. The surge in options notional value indicates that market participants are actively employing complex strategies, possibly including protective puts or bearish spreads.

Mphasis’s Mojo Score currently stands at 44.0, with a Mojo Grade downgraded from Hold to Sell as of 1 Feb 2026. This downgrade reflects deteriorating fundamentals or technical outlook, which aligns with the observed market behaviour. The company’s market capitalisation is ₹50,345.21 crores, categorising it as a mid-cap stock with moderate liquidity, sufficient to support sizeable trades up to ₹2.52 crores based on recent average traded values.

Sector and Benchmark Comparison

While Mphasis’s stock declined by 6.29% on the day, the broader IT - Software sector fell by 6.28%, indicating that the stock’s performance was largely in line with sector trends. However, the Sensex managed a marginal gain of 0.11%, highlighting a divergence between the broader market and the IT sector’s weakness.

This sectoral underperformance, combined with the stock’s technical weakness and rising open interest, suggests that investors are cautious about near-term growth prospects in the software consulting space, possibly due to macroeconomic concerns or company-specific factors.

Implications for Investors

The combination of a significant open interest increase, heavy volume near intraday lows, and a downgrade in Mojo Grade to Sell signals caution for investors. The market appears to be pricing in near-term challenges for Mphasis, possibly related to earnings concerns, competitive pressures, or broader sectoral headwinds.

Investors should closely monitor upcoming quarterly results and sector developments. The elevated options activity also suggests that volatility may remain high, offering opportunities for tactical traders but increasing risk for long-term holders.

Given the current technical and fundamental signals, a defensive stance or selective profit booking may be prudent until clearer directional cues emerge.

Outlook and Conclusion

Mphasis Ltd. is currently navigating a challenging phase marked by bearish price action and increased speculative activity in derivatives. The 13.4% rise in open interest, coupled with a 6.65% drop in stock price, reflects a market positioning that favours downside or hedging strategies. While the stock remains aligned with sector weakness, its technical indicators and Mojo downgrade suggest further caution.

Investors should weigh these factors carefully, considering both the risks and potential volatility ahead. Monitoring delivery volumes, open interest trends, and sectoral momentum will be key to assessing the stock’s trajectory in the coming weeks.

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