Mphasis Ltd. Sees Sharp Open Interest Surge Amid Bearish Price Action

Open Interest and Volume Dynamics

The open interest (OI) in Mphasis derivatives rose sharply from 21,630 contracts to 24,870 contracts, marking an increase of 3,240 contracts or 14.98% on 4 Feb 2026. This surge in OI was accompanied by a robust volume of 20,707 contracts traded, indicating active participation from market participants. The futures segment alone accounted for a value of approximately ₹35,110.87 lakhs, while options contributed a staggering ₹12,078.66 crores, culminating in a total derivatives value of ₹37,196.40 lakhs.

Such a pronounced increase in open interest alongside high volume typically suggests fresh positions are being established rather than existing ones being squared off. This is a key signal that traders are either building new directional bets or hedging strategies in anticipation of upcoming price movements.

Price Action and Market Context

Despite the surge in derivatives activity, Mphasis’s underlying stock price showed weakness on the day. The stock opened with a gap down of 2.19% and touched an intraday low of ₹2,615.10, representing a steep 7.24% decline from previous levels. The weighted average price of traded shares was closer to the day’s low, indicating selling pressure dominated throughout the session.

Moreover, Mphasis is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — underscoring a bearish technical setup. This contrasts with the broader Sensex, which gained 0.32% on the same day, highlighting sector-specific headwinds. The IT - Software sector itself declined by 5.53%, reflecting a challenging environment for technology stocks.

Investor Participation and Delivery Volumes

Investor participation in Mphasis has notably increased, with delivery volumes rising to 3.67 lakh shares on 3 Feb 2026, a 49.59% jump compared to the five-day average. This suggests that despite the price weakness, long-term investors may be accumulating shares, possibly viewing the dip as an opportunity. The stock’s liquidity remains adequate, with a trade size capacity of ₹2.52 crore based on 2% of the five-day average traded value, facilitating smooth execution of sizeable trades.

Interpreting the Open Interest Surge: Directional Bets or Hedging?

The sharp rise in open interest amid falling prices often points to increased short selling or put option buying, reflecting bearish sentiment. However, the substantial option value and futures activity suggest a complex positioning landscape. Market participants may be employing protective puts to hedge existing long positions or speculating on further downside.

Given Mphasis’s current Mojo Score of 44.0 and a downgrade from Hold to Sell on 1 Feb 2026, the derivatives market appears to be aligning with the fundamental and technical caution. The company’s market cap stands at ₹50,880.67 crore, categorising it as a mid-cap stock with a Market Cap Grade of 2, indicating moderate size but limited institutional heft compared to large caps.

Sectoral and Broader Market Implications

The IT - Software sector’s 5.53% decline on the day has weighed heavily on Mphasis, which outperformed the sector marginally by 0.5% but still posted a 5.29% loss. This relative outperformance amid sector weakness may indicate selective buying interest or defensive positioning by investors who view Mphasis as a comparatively resilient name within the sector.

However, the stock’s failure to hold above key moving averages and the negative price momentum suggest that any relief rally may be limited unless supported by positive sectoral catalysts or company-specific developments.

Outlook and Investor Takeaways

With the derivatives market signalling increased activity and a tilt towards bearish positioning, investors should exercise caution on Mphasis in the near term. The downgrade to a Sell rating by MarketsMOJO, combined with the stock’s technical weakness and sector headwinds, suggests limited upside potential at present.

However, the rising delivery volumes indicate that some long-term investors may be selectively accumulating on dips, anticipating a recovery once broader IT sector pressures ease. Monitoring open interest trends alongside price action will be crucial to gauge whether the current surge in derivatives activity translates into sustained directional moves or remains a transient hedging phenomenon.

Investors are advised to keep a close watch on upcoming quarterly results, sectoral developments, and global IT spending trends, which could materially influence Mphasis’s trajectory.

Summary

Mphasis Ltd. has experienced a notable 15% increase in open interest in its derivatives segment amid a 5.29% decline in its stock price on 4 Feb 2026. The stock’s technical indicators remain bearish, trading below all major moving averages, while the IT sector continues to face pressure. Elevated delivery volumes suggest some accumulation by long-term investors, but the overall market positioning points to cautious sentiment. The downgrade to a Sell rating and a Mojo Score of 44.0 reinforce the need for prudence. Investors should closely monitor derivatives activity and sectoral cues before making fresh commitments.

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