Shriram Finance Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the options market reveals that put contracts for Shriram Finance Ltd expiring on 24 February 2026 have seen substantial volumes. Specifically, the ₹970 strike put option recorded 2,081 contracts traded, generating a turnover of ₹572.05 lakhs, while the ₹960 strike put option saw 2,031 contracts traded with a turnover of ₹496.64 lakhs. Open interest figures stand at 714 and 929 contracts respectively, indicating sustained investor interest and potential build-up of bearish bets or protective hedges.

The underlying stock price currently hovers around ₹962.30, placing these strike prices just at or slightly above the market level. This proximity suggests that traders are positioning for a possible downside move or seeking to protect existing long positions against near-term declines.

Price Performance and Market Context

Shriram Finance Ltd has underperformed its sector by 2.71% on the day, with the stock price falling 3.44% compared to a marginal 0.37% decline in the NBFC sector and a 0.22% gain in the Sensex. The stock has been on a three-day losing streak, cumulatively declining 5.53%, and touched an intraday low of ₹962, down 3.57% from previous levels. The weighted average traded price skewed closer to the day’s low, reflecting selling pressure.

Technical indicators show the stock trading above its 50-day, 100-day, and 200-day moving averages, but below its 5-day and 20-day averages, signalling short-term weakness amid longer-term support. Rising investor participation is evident from a 17.08% increase in delivery volume on 30 January 2026, reaching 46.73 lakh shares, suggesting heightened interest despite recent price declines. Liquidity remains robust, with the stock able to support trade sizes of approximately ₹12.66 crores based on 2% of the five-day average traded value.

Investor Sentiment and Hedging Implications

The surge in put option volumes at strike prices near the current market level suggests a cautious or bearish stance among market participants. Put options serve as a tool for hedging long equity positions or speculating on price declines. The elevated open interest at ₹960 and ₹970 strikes indicates that investors may be seeking downside protection or positioning for a potential correction in Shriram Finance Ltd’s share price.

Given the stock’s recent underperformance relative to the NBFC sector and the broader market, this heightened put activity aligns with a risk-off sentiment. The stock’s Mojo Score of 72.0 and upgraded Mojo Grade to ‘Buy’ from ‘Hold’ as of 15 December 2025 reflect underlying fundamental strength, but the short-term technical weakness and option market positioning highlight investor caution.

Expiry Patterns and Market Impact

The 24 February 2026 expiry date is attracting significant attention, with put option turnover exceeding ₹1 crore across the two most active strikes alone. This concentration of activity near the money may lead to increased volatility as expiry approaches, especially if the stock price moves closer to or below these strike levels. Traders and hedgers will be closely monitoring price action for signs of a breakout or further decline.

Open interest data also suggests that while some investors are initiating new bearish positions, others may be rolling over existing hedges or adjusting portfolios in response to evolving market conditions. The interplay between spot price movements and option expiry dynamics will be critical in shaping near-term trading strategies.

Fundamental and Sectoral Context

Shriram Finance Ltd operates in the Non Banking Financial Company (NBFC) sector, a space that has seen mixed performance amid tightening credit conditions and regulatory scrutiny. Despite these headwinds, the company maintains a strong market cap grade of 1, indicating its large-cap status and relative stability within the sector.

The recent upgrade in Mojo Grade from ‘Hold’ to ‘Buy’ reflects improved financial metrics and positive outlook factors, including asset quality and earnings growth prospects. However, the current market volatility and option market signals suggest that investors remain vigilant, balancing optimism with prudent risk management.

Outlook and Investor Considerations

For investors, the active put option trading in Shriram Finance Ltd offers valuable insight into market sentiment and potential price trajectories. Those holding long positions may consider the elevated put volumes as a warning to implement protective strategies, such as buying puts or tightening stop-loss levels. Conversely, traders with a bearish outlook might view the current option activity as confirmation of downside potential, especially if the stock breaches key support levels near ₹960.

Given the stock’s liquidity and significant delivery volumes, market participants can execute sizeable trades without excessive slippage, facilitating both speculative and hedging strategies. Monitoring open interest changes and strike price concentrations will be essential in anticipating price movements as the 24 February expiry approaches.

Conclusion

Shriram Finance Ltd’s recent surge in put option activity underscores a cautious market stance amid short-term price weakness. While the company’s fundamentals and upgraded Mojo Grade support a positive long-term view, the derivatives market reveals heightened hedging and bearish positioning. Investors should weigh these factors carefully, balancing fundamental strengths against technical signals and option market dynamics to navigate the evolving landscape effectively.

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