Mphasis Ltd Sees Sharp Open Interest Surge Amid Weak Price Action

Open Interest and Volume Dynamics

On 19 Feb 2026, Mphasis recorded an increase in open interest from 33,628 contracts to 37,085 contracts, marking a rise of 3,457 contracts or 10.28%. This uptick in OI was accompanied by a futures volume of 15,712 contracts, reflecting heightened trading activity in the derivatives market. The combined futures and options value stood at approximately ₹5,59,68 lakhs, with futures contributing ₹55,478.6 lakhs and options an overwhelming ₹5,14,09.3 lakhs, underscoring the significant interest in options strategies.

The underlying stock price, however, has been under pressure. Mphasis closed the day at ₹2,400, having touched an intraday low of ₹2,386.2, down 2.04% intraday and 1.63% on the day, underperforming the sector’s marginal decline of 0.09% and the Sensex’s 0.94% fall. The stock has now declined for two consecutive sessions, losing 2.77% over this period.

Market Positioning and Directional Bets

The surge in open interest amid falling prices suggests that market participants are actively repositioning. Typically, rising OI with declining prices can indicate fresh short positions being initiated or put option buying, reflecting bearish sentiment. Conversely, it may also represent hedging activity by long holders protecting against downside risk.

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 cautious stance. The stock is trading below all major moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling a sustained downtrend. This technical weakness, combined with falling delivery volumes (down 70.54% to 1.49 lakh shares on 18 Feb), points to waning investor participation in the cash market, while derivatives activity intensifies.

Implications of Derivatives Activity on Price Trends

The increase in open interest by over 3,400 contracts in a single session is significant for a mid-cap stock like Mphasis, which has a market capitalisation of ₹46,240 crores. This suggests that institutional and sophisticated traders are actively taking positions, possibly anticipating further downside or volatility ahead.

Options market data, with an options value exceeding ₹5,14,000 lakhs, indicates that traders are employing complex strategies such as protective puts or spreads to manage risk. The large notional value in options relative to futures suggests a preference for limited-risk strategies rather than outright directional bets.

Meanwhile, the stock’s liquidity remains adequate, with a 2% threshold of the 5-day average traded value allowing for trade sizes up to ₹4.48 crores. This ensures that the derivatives market activity is supported by sufficient cash market liquidity, although the sharp drop in delivery volumes signals reduced conviction among long-term investors.

Sector and Market Context

Mphasis’s underperformance relative to the Computers - Software & Consulting sector and the broader Sensex index highlights sector-specific challenges or company-specific concerns. The sector’s 1-day return of -0.09% contrasts with Mphasis’s -1.65%, indicating stock-specific weakness.

Given the downgrade to a Sell rating by MarketsMOJO on 1 Feb 2026, investors should be cautious. The company’s Market Cap Grade of 2 reflects its mid-cap status, which often entails higher volatility and sensitivity to market sentiment shifts compared to large-cap peers.

Investor Takeaways and Outlook

Investors should interpret the rising open interest in Mphasis derivatives with caution. The combination of falling prices, declining delivery volumes, and a downgrade in fundamental ratings suggests that the market consensus is bearish or at best neutral on the stock’s near-term prospects.

Traders active in the derivatives market appear to be positioning for increased volatility or further downside, possibly hedging existing long exposures or initiating fresh short positions. The stock’s failure to hold above key moving averages reinforces the technical weakness.

For long-term investors, the current environment calls for close monitoring of quarterly earnings, sectoral trends, and broader IT spending patterns. Meanwhile, short-term traders may find opportunities in volatility but should remain vigilant about risk management given the stock’s mid-cap status and recent negative momentum.

Conclusion

Mphasis Ltd.’s recent surge in open interest amid declining prices and subdued investor participation in the cash market signals a complex interplay of bearish sentiment and hedging activity. The downgrade to a Sell rating and technical weakness across multiple moving averages further underline the cautious stance warranted by investors. While derivatives market activity suggests heightened interest and potential volatility, the overall outlook remains subdued until clear signs of a reversal or fundamental improvement emerge.

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