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

Recent Price Performance and Market Context

TCS closed at ₹2,934 on 6 Feb 2026, down 2.34% on the day and approximately 2.3% above its 52-week low of ₹2,866.6. The stock has been under pressure, declining nearly 9.03% over the past three trading sessions. Intraday lows touched ₹2,918.1, reflecting persistent selling interest. Notably, TCS is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, underscoring a sustained downtrend.

Investor participation has also waned, with delivery volumes on 5 Feb falling by 38.08% compared to the five-day average, signalling reduced conviction among long-term holders. Despite this, the stock maintains a relatively high dividend yield of 3.64%, which may provide some defensive appeal amid volatility. Liquidity remains robust, with the stock capable of supporting trade sizes up to ₹32.5 crores based on recent average traded values.

Call Option Activity: Strike Prices and Expiry Patterns

Options data reveals that call options with strike prices of ₹3,000 and ₹3,100 expiring on 24 Feb 2026 have been the most actively traded. Specifically, the ₹3,000 strike call saw 7,929 contracts traded, generating a turnover of approximately ₹716.96 lakhs, while the ₹3,100 strike call recorded 8,398 contracts traded with a turnover of ₹331.41 lakhs. Open interest for these strikes remains elevated at 10,181 and 10,099 contracts respectively, indicating sustained interest and potential accumulation.

The underlying stock price of ₹2,934 places these strikes slightly out-of-the-money (OTM) for the ₹3,100 call and near-the-money (NTM) for the ₹3,000 call. The concentration of activity at these levels suggests that traders are positioning for a potential rebound or volatility spike ahead of the February expiry. The high open interest also implies that market participants are either establishing new bullish positions or rolling over existing ones.

Investor Sentiment and Bullish Positioning

Despite the recent downtrend, the surge in call option volumes and open interest points to a cautiously optimistic outlook among options traders. The preference for strikes above the current market price indicates expectations of a recovery or at least a stabilisation in the near term. This is particularly noteworthy given the stock’s downgrade from a Sell to a Hold rating on 22 Apr 2025, with a Mojo Score of 51.0 and a Market Cap Grade of 1, reflecting a large-cap status but moderate momentum.

Such positioning may be driven by several factors, including the stock’s attractive dividend yield, its dominant industry position, and the broader sector performance which has been inline with TCS’s recent returns. The sector itself declined by 2.00% on the day, closely mirroring TCS’s 2.04% drop, while the Sensex fell by a more modest 0.41%, highlighting sector-specific pressures.

Technical Indicators and Moving Averages

The technical landscape for TCS remains challenging. The stock’s position below all key moving averages signals a bearish trend, with resistance likely to be encountered near the 50-day and 100-day averages. This technical weakness may explain the recent selling pressure and the stock’s proximity to its yearly lows.

However, the active call option interest at strikes above the current price suggests that some investors are anticipating a technical rebound or a relief rally. This dichotomy between price action and options positioning is not uncommon in large-cap stocks where institutional investors may use options to hedge or speculate on volatility.

Market Capitalisation and Sectoral Context

TCS commands a market capitalisation of approximately ₹10,60,244.37 crores, firmly placing it in the large-cap category. Its Mojo Grade of Hold, upgraded from Sell in April 2025, reflects a cautious stance by analysts amid mixed signals from fundamentals and technicals. The Computers - Software & Consulting sector, to which TCS belongs, has been under pressure but remains a critical driver of India’s IT exports and digital transformation initiatives.

Given the sector’s inline performance with TCS’s recent returns, investors may be weighing broader macroeconomic factors such as global IT spending trends, currency fluctuations, and geopolitical risks that could impact earnings visibility.

Implications for Investors and Traders

The heightened call option activity in TCS, particularly at strikes just above the current market price, offers valuable insights for investors and traders. For bullish investors, these options may represent leveraged opportunities to capitalise on a potential rebound, especially given the stock’s attractive dividend yield and large-cap stature.

Conversely, the persistent downtrend and declining delivery volumes caution against aggressive long positions without confirmation of a trend reversal. Traders may also interpret the elevated open interest as a sign of increased volatility expectations, which could translate into wider price swings in the near term.

Overall, the options market activity suggests a nuanced outlook where market participants are hedging bets and positioning for multiple scenarios ahead of the February expiry.

Conclusion

Tata Consultancy Services Ltd. is currently navigating a challenging phase marked by a bearish price trend and subdued investor participation. Nonetheless, the surge in call option volumes and open interest at key strike prices indicates that a segment of the market remains optimistic about a near-term recovery or volatility-driven opportunities. Investors should monitor technical signals closely and consider the broader sectoral and macroeconomic context when evaluating TCS’s prospects. The stock’s Hold rating and moderate Mojo Score reflect this balanced view, underscoring the importance of a cautious yet opportunistic approach.

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