Reliance Industries Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Surge Reflects Investor Caution

On 1 February 2026, Reliance Industries recorded the most active put options trading in the market, with 7,530 contracts exchanged at the ₹1,400 strike price expiring on 24 February 2026. This activity generated a turnover of ₹1178.445 lakhs and an open interest of 6,944 contracts, underscoring a substantial build-up of bearish bets or protective hedges against potential downside risks.

The underlying stock price stood at ₹1,370, below the put strike price, indicating that investors are positioning for further declines or seeking downside protection. The put option volume and open interest levels are notably high compared to typical daily averages, suggesting a pronounced shift in market sentiment.

Price Performance and Technical Weakness

Reliance Industries has underperformed its oil sector peers by 0.31% on the day, with the stock falling 1.28% to close near ₹1,370. The intraday low touched ₹1,343, marking a 3.76% drop from recent levels. This decline is significant given the stock’s large-cap status and its influence on broader market indices.

Technically, the stock is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling sustained downward momentum. Such a technical setup often prompts investors to seek downside protection through put options or to speculate on further declines.

Declining Investor Participation Adds to Bearish Outlook

Investor participation has also waned, with delivery volumes falling by 16.79% against the five-day average, registering 88.17 lakh shares on 30 January 2026. This drop in delivery volume suggests reduced conviction among buyers, potentially amplifying bearish sentiment.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹47.86 crore, ensuring that option and stock trades can be executed without significant price impact.

Mojo Score Downgrade Reflects Cautious Outlook

MarketsMOJO’s latest assessment downgraded Reliance Industries from a Buy to a Hold rating on 6 January 2026, reflecting a more cautious stance amid the stock’s recent weakness. The company’s Mojo Score currently stands at 62.0, indicating moderate quality and performance metrics. Despite its dominant position in the oil sector and a massive market capitalisation of ₹18,96,305 crore, the downgrade signals concerns over near-term headwinds.

The Market Cap Grade remains at 1, confirming Reliance’s status as a large-cap heavyweight. However, the downgrade suggests that investors should be selective and monitor the stock’s technical and fundamental developments closely.

Expiry Patterns and Strike Price Significance

The concentration of put option activity at the ₹1,400 strike price, just above the current market price, is particularly telling. This strike acts as a psychological and technical support level, with traders either hedging existing long positions or speculating on a breach that could trigger further declines.

Options expiring on 24 February 2026 are attracting the most interest, indicating that market participants expect significant price movement or volatility within the next three weeks. Such expiry-driven positioning often precedes heightened market activity and can foreshadow directional shifts.

Sector and Market Context

Reliance’s 1-day return of -1.28% slightly outperforms the Sensex’s decline of -1.31% but underperforms the oil sector’s broader fall of -1.46%. This relative performance suggests that while the sector is under pressure, Reliance is not immune to the selling pressure and may be more vulnerable due to its technical setup and investor positioning.

Given the oil sector’s sensitivity to global commodity prices, geopolitical developments, and domestic policy changes, investors are likely using options to manage risk amid uncertain market conditions.

Investor Implications and Outlook

The heavy put option activity in Reliance Industries signals a cautious or bearish stance among sophisticated investors and traders. Those holding long positions may be employing puts as insurance against further downside, while speculators could be betting on a correction below ₹1,400.

Given the stock’s technical weakness, declining delivery volumes, and recent downgrade, investors should closely monitor upcoming earnings, crude oil price trends, and macroeconomic developments that could influence the stock’s trajectory.

While Reliance remains a cornerstone of the Indian equity market with a robust business model, the current option market dynamics suggest that near-term risks are elevated. Prudent investors may consider hedging strategies or await clearer signs of a technical rebound before increasing exposure.

Conclusion

Reliance Industries Ltd’s pronounced put option activity ahead of the 24 February expiry highlights a growing bearish sentiment and hedging demand. Trading below key moving averages and underperforming its sector, the stock faces technical and fundamental challenges that warrant caution. Investors should weigh the risks carefully and consider the evolving market context before making fresh commitments.

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