Mphasis Ltd. Sees Sharp Open Interest Surge Amidst Continued Price Decline

Open Interest and Volume Dynamics

On 24 Feb 2026, Mphasis recorded an open interest of 37,826 contracts, up from 31,712 the previous session, marking an absolute increase of 6,114 contracts or 19.28%. This rise in OI was accompanied by a volume of 38,130 contracts, indicating robust trading activity in the derivatives market. The futures segment alone accounted for a notional value of approximately ₹81,171 lakhs, while options contributed a staggering ₹15,717 crore, culminating in a total derivatives value of ₹84,023 lakhs. Such figures underscore the growing interest and liquidity in Mphasis derivatives, making it a focal point for traders seeking to capitalise on volatility.

Price Performance and Market Context

Despite the surge in derivatives activity, Mphasis’s underlying equity price has been under pressure. The stock has declined for five consecutive sessions, shedding 10.16% over this period. On 24 Feb, it opened with a gap down of 3.45% and touched an intraday low of ₹2,210.7, down 4.29% from the previous close. The stock currently trades below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a sustained bearish trend. This contrasts with the broader IT - Software sector, which fell 4.6% on the same day, while Mphasis outperformed the sector marginally by 0.37% in relative terms.

Investor Participation and Liquidity

Investor engagement in Mphasis shares has notably increased, with delivery volumes on 23 Feb rising by 99.13% to 4.73 lakh shares compared to the five-day average. This surge in delivery volume suggests that long-term investors are either accumulating or liquidating positions amid the price correction. The stock’s liquidity remains adequate, with a trade size capacity of ₹2.9 crore based on 2% of the five-day average traded value, ensuring that institutional and retail participants can transact without significant market impact.

Interpreting the Open Interest Surge

The sharp increase in open interest amid falling prices typically indicates that new short positions are being established, or that existing longs are being unwound. Given Mphasis’s 5-day consecutive decline and the stock trading below all major moving averages, the market sentiment appears bearish. Traders may be positioning for further downside, using derivatives to hedge or speculate on continued weakness.

However, the marginal outperformance relative to the sector and the spike in delivery volumes suggest that some investors might be selectively accumulating at lower levels, anticipating a potential rebound or value realisation. The mixed signals from derivatives and cash market activity highlight a nuanced market positioning where short-term traders dominate the derivatives space, while longer-term investors remain active in the cash segment.

Mojo Score and Analyst Ratings

Mphasis currently holds a Mojo Score of 38.0, categorised as a Sell, a downgrade from its previous Hold rating as of 1 Feb 2026. The Market Cap Grade stands at 2, reflecting its mid-cap status with a market capitalisation of ₹42,637 crore. This rating downgrade aligns with the recent price weakness and bearish technical indicators, signalling caution for investors. The deteriorating momentum and negative trend across multiple timeframes reinforce the need for prudent risk management.

Sectoral and Broader Market Comparison

While Mphasis has underperformed the Sensex, which declined 1.16% on the day, it has marginally outperformed its IT - Software sector peers, which fell 4.6%. This relative resilience could be attributed to company-specific factors or selective investor interest. Nonetheless, the broader sector weakness and the stock’s technical breakdown suggest that Mphasis is not immune to the prevailing market headwinds affecting technology stocks.

Potential Directional Bets and Market Outlook

The derivatives market activity in Mphasis suggests that traders are increasingly betting on further downside or volatility. The surge in open interest and volume, combined with the stock’s technical weakness, points to a predominance of bearish positioning. However, the elevated delivery volumes and slight relative outperformance hint at a possible accumulation phase by longer-term investors, potentially setting the stage for a future recovery if broader market conditions improve.

Investors should closely monitor upcoming earnings, sectoral developments, and broader market cues to gauge whether the current bearish momentum will persist or if a reversal is imminent. Given the current Mojo Sell rating and deteriorating technicals, a cautious approach is advisable, with attention to risk management and position sizing.

Summary

Mphasis Ltd. is currently navigating a challenging phase marked by a significant rise in derivatives open interest amid a sustained price decline. The market’s mixed signals reflect a tug-of-war between short-term bearish bets and potential long-term accumulation. With a downgraded Mojo Grade and technical indicators signalling weakness, investors should remain vigilant and consider alternative opportunities within the sector or broader market.

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