Reliance Industries Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Highlights Bearish Sentiment

On 29 January 2026, Reliance Industries recorded the most active put options trading on the National Stock Exchange, with 2,603 contracts changing hands at the ₹1,400 strike price. This activity generated a turnover of approximately ₹4.54 crores, underscoring the substantial interest in downside protection or speculative bearish bets. Open interest in these put options stands at 6,369 contracts, indicating a sustained build-up of positions ahead of the February expiry.

The underlying stock price closed at ₹1,391 on the same day, just below the ₹1,400 strike, suggesting that traders are positioning for a potential decline or increased volatility in the near term. This level is psychologically significant and may act as a focal point for option traders assessing risk and reward.

Technical Weakness Fuels Defensive Strategies

Reliance Industries has been trading below all major moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This technical weakness is a red flag for many investors, signalling a downtrend or consolidation phase. The stock underperformed its oil sector peers by 0.4% on the day, while the broader Sensex declined by 0.56%, reflecting a cautious market environment.

Investor participation has also waned, with delivery volumes falling by 28.1% to 68.9 lakh shares on 28 January compared to the five-day average. This decline in delivery volume suggests reduced conviction among buyers, further supporting the narrative of defensive positioning through put options.

Market Cap and Mojo Score Contextualise Risk

Reliance Industries commands a formidable market capitalisation of ₹18,82,502 crores, categorising it as a large-cap heavyweight within the oil sector. Despite this stature, the company’s Mojo Score has recently declined from a Buy to a Hold rating as of 6 January 2026, with a current score of 62.0. This downgrade reflects a tempered outlook based on recent price action, sector dynamics, and valuation considerations.

The market cap grade remains at 1, indicating the company’s dominant size, but the day’s price change of -0.19% and a one-day return of -0.47% relative to the sector’s positive 0.31% return highlight the stock’s relative weakness. Such factors likely contribute to the increased demand for put options as investors seek to hedge or capitalise on potential downside.

Expiry Patterns and Investor Behaviour

The 24 February 2026 expiry date for these put options is less than a month away, a period during which volatility often intensifies as traders adjust positions ahead of quarterly results, macroeconomic data releases, or geopolitical developments. The concentration of open interest at the ₹1,400 strike price suggests that this level is a key battleground for bulls and bears alike.

Put options serve as a popular instrument for hedging long stock positions or speculating on declines without the need to short sell. The high turnover and open interest in Reliance’s puts indicate that market participants are either protecting gains or positioning for a correction, reflecting a cautious stance amid uncertain market conditions.

Liquidity and Trading Viability

Reliance Industries remains sufficiently liquid for sizeable trades, with an average traded value supporting a trade size of approximately ₹47.91 crores based on 2% of the five-day average. This liquidity ensures that option traders can enter and exit positions with relative ease, an important consideration for institutional investors and hedge funds managing large portfolios.

However, the falling delivery volumes and persistent trading below key moving averages suggest that the stock may face continued pressure in the short term, reinforcing the attractiveness of put options as a risk management tool.

Implications for Investors and Traders

For investors holding Reliance Industries shares, the heightened put option activity signals a need for caution. The stock’s technical underperformance and declining investor participation suggest that downside risks are being priced in. Those with long exposure may consider protective strategies such as buying puts or employing collars to mitigate potential losses.

Conversely, traders with a bearish outlook might view the current option market dynamics as an opportunity to capitalise on expected volatility or price declines. The ₹1,400 strike price, close to the current market level, offers a strategic point for speculative positions with defined risk.

Long-term investors should also monitor upcoming earnings announcements and sector developments, as these could catalyse a reversal or further deterioration in the stock’s trend. The recent downgrade from Buy to Hold by MarketsMOJO reflects a more cautious stance, underscoring the importance of reassessing portfolio allocations in light of evolving fundamentals and market sentiment.

Sector and Broader Market Context

The oil sector has experienced mixed performance amid fluctuating crude prices and global economic uncertainties. Reliance Industries, as a bellwether stock, often mirrors these sectoral trends but also faces company-specific challenges such as refining margins and capital expenditure plans. The stock’s underperformance relative to its sector peers on 29 January 2026 highlights the nuanced risk environment investors must navigate.

Meanwhile, the broader Sensex’s decline of 0.56% on the day adds to the cautious mood, with investors seeking safe havens or hedging strategies. The active put option interest in Reliance is consistent with a market that is bracing for potential volatility in the near term.

Conclusion

Reliance Industries Ltd’s pronounced put option activity ahead of the 24 February expiry reflects a growing bearish sentiment and a strategic hedging approach by market participants. Trading below key moving averages and experiencing falling delivery volumes, the stock is signalling caution to investors. While its large market capitalisation and sector leadership remain intact, the recent downgrade to a Hold rating and technical weakness suggest that downside risks are being actively managed through options.

Investors and traders alike should closely monitor option market trends, technical indicators, and sector developments to navigate the evolving landscape. Reliance’s liquidity and active options market provide ample opportunity for both defensive and speculative strategies, but the prevailing sentiment advises prudence in portfolio positioning.

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