Mphasis Ltd. Sees Sharp Open Interest Surge Amidst Weak Price Action

Open Interest and Volume Dynamics

On 23 Feb 2026, Mphasis recorded an open interest (OI) of 37,731 contracts, up from 34,177 the previous day, marking an absolute increase of 3,554 contracts or 10.4%. This rise in OI is significant given the stock’s declining price trend, which has seen it fall by 3.23% on the day and underperform its sector by 1.85%. The total futures volume stood at 29,622 contracts, indicating active trading interest in the derivatives market.

The futures value traded was approximately ₹75,957 lakhs, while the options segment exhibited an enormous notional value of ₹11,739.85 crores, underscoring the substantial liquidity and speculative interest in Mphasis derivatives. The combined turnover of futures and options amounted to ₹77,052 lakhs, reflecting robust market participation despite the stock’s recent weakness.

Price Performance and Technical Context

Mphasis has been on a downward trajectory, losing 6.75% over the past four consecutive sessions. The stock touched an intraday low of ₹2,296.7 on 23 Feb 2026, a 3.25% decline from the previous close. It is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a bearish technical setup. This persistent weakness contrasts with the rising open interest, suggesting that new positions are being initiated amid falling prices.

Investor participation has also waned, with delivery volumes dropping by 39.1% to 2.5 lakh shares on 20 Feb 2026 compared to the 5-day average. This decline in delivery volume indicates reduced conviction among long-term investors, possibly shifting the focus to short-term trading and speculative activity in the derivatives market.

Market Positioning and Potential Directional Bets

The simultaneous rise in open interest and decline in price often indicates that fresh short positions are being built, or that longs are liquidating, leading to increased bearish bets. Given Mphasis’s current Mojo Score of 44.0 and a downgrade from Hold to Sell on 1 Feb 2026, market participants appear to be positioning for further downside risk.

However, the substantial options notional value suggests that some traders may be employing complex strategies such as protective puts or spreads to hedge or speculate on volatility. The underlying value of the stock at ₹2,300 provides a reference point for strike prices in the options chain, which could be influencing the open interest build-up.

Liquidity remains adequate, with the stock’s 5-day average traded value supporting trade sizes up to ₹2.64 crores, enabling institutional and retail traders to execute sizeable positions without significant market impact. This liquidity facilitates active derivatives trading, which is reflected in the elevated volumes and open interest.

Sector and Benchmark Comparison

While Mphasis has underperformed its sector by 1.85% on the day and declined 6.75% over four days, the broader Sensex has managed a modest gain of 0.33%. This divergence highlights stock-specific weakness amid a relatively stable market environment. The Computers - Software & Consulting sector remains under pressure, but Mphasis’s sharper decline and negative momentum suggest company-specific factors or profit-taking are at play.

The downgrade in Mojo Grade from Hold to Sell, coupled with a low Market Cap Grade of 2, further emphasises the cautious stance investors and analysts are adopting towards Mphasis. These ratings reflect concerns over near-term earnings visibility, competitive pressures, or valuation risks that may be influencing market sentiment.

Implications for Investors and Traders

The surge in open interest amidst falling prices and declining delivery volumes suggests that traders are increasingly adopting bearish or hedged positions in Mphasis. For investors, this signals caution as the market anticipates potential further downside or volatility in the near term.

Long-term holders should monitor the stock’s ability to hold key support levels and watch for any reversal signals in volume and open interest trends. Meanwhile, short-term traders may find opportunities in the derivatives market to capitalise on directional moves or volatility plays, given the active options and futures turnover.

Given the current technical weakness and negative analyst sentiment, a conservative approach is advisable until clearer signs of a turnaround emerge. The stock’s liquidity and active derivatives market provide flexibility for various trading strategies, but risk management remains paramount.

Outlook and Conclusion

Mphasis Ltd.’s recent open interest surge in derivatives, set against a backdrop of declining prices and investor participation, paints a picture of heightened market scrutiny and positioning shifts. The downgrade to a Sell rating and the stock’s underperformance relative to its sector and benchmark indices reinforce a cautious outlook.

Investors should closely track open interest and volume patterns as leading indicators of market sentiment and potential price direction. The current data suggests that bearish bets are gaining traction, but the sizeable options activity also hints at strategic hedging and volatility plays.

In summary, Mphasis is navigating a challenging phase with increased speculative interest in its derivatives, signalling that market participants are bracing for further price action. Prudent investors and traders will benefit from careful analysis of evolving open interest trends and technical signals before committing to new positions.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today