Reliance Industries Sees Surge in Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the derivatives market reveals that Reliance Industries Ltd (stock code: 605152) has emerged as the most active stock in put options trading, particularly for contracts expiring on 27 January 2026. Two strike prices have attracted significant attention: ₹1,380 and ₹1,390. At the ₹1,380 strike, 9,151 contracts were traded, generating a turnover of ₹409.96 lakhs and an open interest of 3,065 contracts. Meanwhile, the ₹1,390 strike saw even higher activity with 9,224 contracts traded, turnover reaching ₹530.38 lakhs, and open interest standing at 2,176 contracts.

The underlying stock price at the time was ₹1,380.5, indicating that these put options are positioned close to the current market price, reflecting investors’ expectations of potential downside or a desire to hedge existing long positions.

Market Context and Stock Performance

Reliance Industries, a heavyweight in the oil sector with a market capitalisation of ₹18,66,262.79 crores, has been under pressure recently. The stock has declined by 1.07% on the day, slightly underperforming the sector’s 1.04% fall and the broader Sensex’s 0.77% drop. Over the past four trading sessions, Reliance has lost 5.26% in value, marking a clear bearish trend.

Technical indicators reinforce this negative momentum. The stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling sustained weakness. Additionally, investor participation appears to be waning, with delivery volumes on 20 January falling by 10.99% compared to the five-day average, suggesting reduced conviction among buyers.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹43.11 crores, ensuring that institutional investors can execute sizeable transactions without significant market impact.

Investor Sentiment and Hedging Strategies

The heavy put option volumes at strike prices near the current market level suggest that investors are either positioning for further downside or actively hedging their existing long exposures. The open interest figures indicate that a substantial number of contracts remain outstanding, which could translate into increased volatility as expiry approaches.

Put options serve as insurance against price declines, and the concentration of activity at ₹1,380 and ₹1,390 strikes implies that market participants are bracing for potential dips below these levels. This is consistent with the stock’s recent technical weakness and the broader oil sector’s challenges amid fluctuating crude prices and global economic uncertainties.

Mojo Score and Analyst Ratings

Reliance Industries currently holds a Mojo Score of 62.0, categorised as a 'Hold' rating. This marks a downgrade from a previous 'Buy' grade assigned on 6 January 2026, reflecting a more cautious stance by analysts. The market cap grade remains at 1, underscoring the company’s large-cap status and significant market influence.

Such a rating adjustment aligns with the observed bearish option activity and the stock’s underperformance relative to sector and benchmark indices. Investors should weigh these factors carefully when considering their exposure to Reliance Industries in the near term.

Expiry Patterns and Potential Impact

The expiry date of 27 January 2026 is critical, as option expiry often triggers increased volatility and price swings. The clustering of put option interest near the current price level could lead to dynamic price movements as traders adjust or close positions ahead of expiry.

Market participants should monitor open interest changes and volume trends closely in the coming days to gauge shifts in sentiment and potential support or resistance levels emerging from option-related activity.

Outlook for Investors

Given the current technical and derivatives market signals, investors should approach Reliance Industries with caution. The sustained decline below key moving averages and the surge in put option activity indicate a prevailing bearish sentiment that could persist in the short term.

However, the company’s dominant position in the oil sector and its large-cap status provide a degree of resilience. Long-term investors may view recent weakness as a potential entry point, but should remain vigilant to market developments and consider hedging strategies to mitigate downside risk.

Active traders might find opportunities in the heightened volatility around option expiry, but must carefully manage risk given the uncertain near-term outlook.

Summary

Reliance Industries Ltd is currently navigating a challenging phase marked by a four-day losing streak and a downgrade in analyst sentiment. The pronounced increase in put option trading at strikes close to the current price highlights investor caution and a preference for downside protection. As expiry approaches on 27 January 2026, market participants should monitor option market dynamics closely to anticipate potential price movements and adjust their strategies accordingly.

Overall, while the stock remains a key player in the oil sector, the prevailing market signals suggest a period of consolidation or correction before any sustained recovery can be expected.

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