Mphasis Ltd Sees Sharp Open Interest Surge Amidst Continued Price Decline

Open Interest and Volume Dynamics

The latest data reveals that Mphasis’s open interest in futures and options contracts has increased from 31,712 to 35,655 contracts, marking a rise of 3,943 contracts or 12.43% on 24 Feb 2026. This uptick in OI is accompanied by a substantial volume of 32,888 contracts traded on the same day, indicating heightened investor activity and interest in the stock’s derivatives.

In monetary terms, the futures segment alone accounted for a value of approximately ₹58,861 lakhs, while the options segment’s notional value stood at a staggering ₹14,694.47 crores. The combined derivatives turnover thus crossed ₹61,470 lakhs, underscoring significant liquidity and participation in Mphasis’s contracts.

Price Performance and Market Context

Despite the surge in derivatives activity, Mphasis’s underlying equity price has been under pressure. The stock opened sharply lower by 3.45% on 24 Feb 2026 and touched an intraday low of ₹2,212.5, down 4.21% from the previous close. Over the past five consecutive trading sessions, the stock has declined by 10.15%, underperforming the broader IT - Software sector, which itself has fallen by 4.57% during the same period.

Notably, Mphasis is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained bearish trend. The stock’s 1-day return of -3.85% also lagged the Sensex’s modest decline of 1.35%, reflecting sector-specific headwinds and stock-specific weakness.

Investor Participation and Liquidity

Investor engagement in Mphasis shares has intensified, as evidenced by a near doubling in delivery volume to 4.73 lakh shares on 23 Feb 2026, a 99.13% increase over the 5-day average delivery volume. This surge in delivery volume suggests that long-term investors are either accumulating or liquidating positions amid the recent volatility.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹2.9 crore based on 2% of the 5-day average traded value. This level of liquidity is conducive for institutional participation and large block trades, which may be influencing the derivatives market activity.

Interpreting the Open Interest Surge

The 12.4% increase in open interest amidst a falling stock price suggests that market participants are actively positioning themselves for potential volatility or directional moves. Typically, rising OI coupled with declining prices can indicate fresh short positions being built or protective put buying by longs hedging downside risk.

Given the substantial notional value in options contracts, it is plausible that traders are employing complex strategies such as spreads or straddles to capitalise on expected price swings. The elevated futures value also points to increased speculative or hedging activity, reflecting divergent views on Mphasis’s near-term prospects.

Mojo Score and Analyst Sentiment

Mphasis currently holds a Mojo Score of 38.0, categorised as a Sell rating, downgraded from Hold on 1 Feb 2026. This downgrade reflects deteriorating fundamentals or technical weakness as assessed by MarketsMOJO’s proprietary grading system. The company’s market cap grade stands at 2, indicating mid-cap status with moderate liquidity and market presence.

The downgrade aligns with the stock’s recent price underperformance and bearish technical setup, reinforcing caution among investors. However, the rising derivatives activity suggests that some market participants may be anticipating a reversal or are actively managing risk through options and futures.

Sectoral and Broader Market Comparison

Within the Computers - Software & Consulting sector, Mphasis’s relative underperformance is notable. While the sector has declined by 4.57% on the day, Mphasis’s 3.85% drop is slightly less severe, indicating some resilience. However, the stock’s five-day cumulative loss of over 10% is sharper than the sector’s trend, signalling stock-specific challenges.

The Sensex’s modest 1.35% decline on the same day highlights that the weakness is concentrated in IT and mid-cap stocks like Mphasis, possibly due to profit booking or sector rotation by institutional investors.

Potential Directional Bets and Market Positioning

The divergence between rising open interest and falling prices often signals a battle between bulls and bears. In Mphasis’s case, the increase in OI could be driven by fresh short sellers betting on further declines or by longs hedging their positions with put options. The sizeable options notional value suggests active hedging and speculative strategies are at play.

Given the stock’s technical weakness—trading below all major moving averages—and the recent downgrade to a Sell rating, the bias appears tilted towards bearish sentiment. However, the elevated derivatives activity also leaves room for a potential short squeeze or volatility-driven rebound if positive triggers emerge.

Investor Takeaway

For investors, the current scenario in Mphasis warrants caution. The stock’s sustained downtrend and negative momentum, combined with a Sell Mojo Grade, suggest limited upside in the near term. However, the surge in open interest and volume indicates that the market is actively pricing in potential volatility, which could present trading opportunities for nimble investors.

Long-term investors should monitor the stock’s ability to reclaim key moving averages and watch for fundamental catalysts that could reverse the downtrend. Meanwhile, traders may consider strategies that capitalise on volatility or hedge downside risk through options.

Company and Market Snapshot

Mphasis Ltd. operates in the Computers - Software & Consulting industry with a market capitalisation of approximately ₹42,344 crore, classifying it as a mid-cap stock. The company’s recent performance and market positioning reflect the broader challenges facing the IT sector amid global economic uncertainties and sector rotation trends.

As of 24 Feb 2026, the stock’s underlying value stood at ₹2,216, with futures and options activity signalling increased market scrutiny and positioning ahead of upcoming earnings or sector developments.

Conclusion

The sharp rise in open interest in Mphasis Ltd.’s derivatives amid a weakening stock price highlights a complex market environment where investors are actively repositioning. While the technical and fundamental outlook remains cautious with a Sell rating, the heightened derivatives activity suggests that volatility and directional bets are intensifying. Investors should remain vigilant, balancing risk management with opportunities arising from market dynamics.

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