Tata Consultancy Services Sees Heavy Call Option Activity Amid Bearish Price Action

Stock Performance and Market Context

TCS, currently trading at ₹3,062.20, opened the trading session on 4 February 2026 with a gap down of 3.26%, reflecting investor caution amid broader sector weakness. The stock touched an intraday low of ₹3,031.20, marking a 6.02% decline from previous levels. This underperformance is in line with the IT - Software sector, which fell by 4.96% on the day, while the Sensex managed a modest gain of 0.23%.

Technical indicators reveal that TCS is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — underscoring a bearish trend. Despite this, delivery volumes have risen sharply, with 26.5 lakh shares delivered on 3 February, a 24.49% increase over the five-day average, suggesting rising investor participation amid the sell-off.

With a market capitalisation of ₹11,07,134.78 crore, TCS remains a large-cap heavyweight, but its Mojo Score of 57.0 and a Mojo Grade of Hold (upgraded from Sell on 22 April 2025) indicate a cautious stance from analysts. The stock also offers a relatively attractive dividend yield of 3.38%, which may provide some support to long-term investors.

Call Option Activity: Strike Prices and Expiry Dynamics

The most active call options for TCS are concentrated around the 24 February 2026 expiry, with significant volumes at strike prices of ₹3,100, ₹3,200, and ₹3,300. These strikes are notably above the current underlying price, indicating a bullish positioning by option traders despite the stock’s recent weakness.

Specifically, the 3,200 strike call option leads in volume with 10,726 contracts traded, generating a turnover of ₹396.06 lakh and an open interest of 8,356 contracts. The 3,300 strike follows with 8,614 contracts traded, ₹140.19 lakh turnover, and a robust open interest of 7,705 contracts. The 3,100 strike call option also saw substantial activity, with 7,147 contracts traded and a turnover of ₹615.23 lakh, though its open interest is comparatively lower at 3,669 contracts.

This clustering of call option activity above the current price suggests that investors are positioning for a potential rebound or are hedging against further downside. The high open interest at these strikes reflects sustained interest and liquidity, which could influence price dynamics as expiry approaches.

Investor Sentiment and Strategic Implications

The divergence between the bearish spot price action and the bullish call option interest highlights a nuanced market outlook. While the stock’s technicals and sectoral pressures point to near-term challenges, the options market reveals optimism about a possible recovery or at least a limited downside scenario.

Investors should note that the weighted average price of traded volumes is closer to the day’s low, indicating that most trading occurred near the bottom of the session. This could imply capitulation or bargain hunting by value-focused participants. However, the stock’s failure to hold above key moving averages remains a concern for momentum traders.

Given TCS’s large-cap status and significant market liquidity—capable of handling trade sizes up to ₹20.73 crore based on recent average traded value—active traders and institutional investors can manoeuvre sizeable positions without excessive slippage. This liquidity also supports the vibrant options market activity observed.

Comparative Analysis and Outlook

When compared to its sector peers, TCS’s recent downgrade from Sell to Hold by MarketsMOJO on 22 April 2025 reflects a tempered outlook amid evolving market conditions. The Mojo Score of 57.0, while not outright negative, suggests that the stock is currently in a consolidation phase rather than a clear uptrend.

Sectoral weakness in IT - Software, with a 4.96% decline on the day, has weighed on TCS’s performance. However, the company’s strong fundamentals, large market cap, and steady dividend yield continue to attract long-term investors. The elevated call option activity may also be indicative of speculative interest or hedging strategies by institutional players anticipating volatility around the upcoming expiry.

Investors should monitor the evolution of open interest and volume in these call strikes closely, as any significant unwinding or rollovers could provide clues about directional conviction. Additionally, the stock’s ability to reclaim key moving averages will be critical for a sustained recovery.

Conclusion

Tata Consultancy Services Ltd. is currently navigating a challenging phase marked by a bearish price trend and sectoral headwinds. Nonetheless, the surge in call option volumes at strikes above the current market price reveals a layer of bullish sentiment or strategic positioning among market participants. This dichotomy underscores the importance of a nuanced approach to TCS, balancing technical caution with the potential for upside catalysts.

For investors and traders alike, understanding the interplay between spot price action and derivatives market activity will be key to making informed decisions in the coming weeks as the 24 February 2026 expiry approaches.

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