Tata Consultancy Services Sees Heavy Put Option Activity Ahead of March Expiry

Put Option Activity Highlights

The put options for TCS expiring on 30 March 2026 have witnessed robust trading volumes, with 2,524 contracts traded at the ₹2,600 strike price and 2,049 contracts at the ₹2,500 strike price. The turnover for these strikes stands at ₹333.48 lakhs and ₹155.37 lakhs respectively, underscoring strong investor interest in downside protection or speculative bearish bets.

Open interest data further corroborates this trend, with 7,372 contracts open at the ₹2,600 strike and 3,377 at ₹2,500. Given the current underlying stock price of ₹2,624.9, these strikes are positioned close to the money, indicating that market participants are actively hedging against potential declines or anticipating a pullback in the near term.

Stock Price and Technical Context

TCS closed the day just 2.43% above its 52-week low of ₹2,561.3, signalling a period of price consolidation near recent lows. The stock has shown a modest recovery after two consecutive days of decline, touching an intraday high of ₹2,652.6, a 3.07% gain on the day. However, it remains below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — suggesting the prevailing trend is still bearish or neutral at best.

Sector-wise, the IT - Software segment gained 2.11% on the day, slightly outperforming TCS’s 1.92% return, while the broader Sensex rose 0.57%. This relative underperformance, combined with the heavy put option activity, points to cautious investor sentiment towards TCS despite the sector’s positive momentum.

Investor Participation and Liquidity

Investor engagement in TCS has surged notably, with delivery volumes on 24 February reaching 50.9 lakh shares — a 187.42% increase compared to the five-day average. This heightened participation suggests that market players are actively repositioning their holdings amid the current volatility.

Liquidity remains ample, with the stock’s traded value comfortably supporting trade sizes up to ₹23.51 crore based on 2% of the five-day average traded value. This ensures that both institutional and retail investors can execute sizeable trades without significant market impact.

Mojo Score and Analyst Ratings

TCS currently holds a Mojo Score of 51.0, placing it in the 'Hold' category after an upgrade from 'Sell' on 22 April 2025. Despite the recent rating improvement, the stock’s Market Cap Grade remains at 1, reflecting its status as a large-cap company with a market capitalisation of ₹9,49,024.36 crore. This rating suggests that while the company maintains solid fundamentals, near-term price action may be constrained by broader market and sector dynamics.

Bearish Positioning and Hedging Implications

The concentration of put option activity at strikes just below the current market price indicates a strategic hedging approach by investors. Market participants may be seeking downside protection in anticipation of potential volatility or sector-specific headwinds. Alternatively, some traders could be speculating on a correction given the stock’s proximity to its 52-week low and its technical positioning below key moving averages.

Such heavy put buying often signals caution, especially in a stock that has shown mixed signals recently. While TCS benefits from a high dividend yield of 4.23%, which typically attracts income-focused investors, the option market activity suggests that risk management remains a priority for many holders.

Expiry Patterns and Market Outlook

The 30 March 2026 expiry is shaping up as a critical juncture for TCS. The elevated open interest and turnover in put options at the ₹2,500 and ₹2,600 strikes imply that investors are positioning for potential downside scenarios over the coming month. This expiry could see increased volatility as traders adjust their positions in response to quarterly earnings updates, sector developments, or macroeconomic factors impacting the IT industry.

Given the stock’s current technical and fundamental backdrop, investors should closely monitor price action around these strike levels. A sustained break below ₹2,500 could trigger further downside, while a rebound above key moving averages might alleviate bearish pressures.

Conclusion: Strategic Positioning Amid Uncertainty

In summary, Tata Consultancy Services is currently experiencing significant put option activity, reflecting a cautious stance among investors as the March expiry approaches. While the company’s fundamentals remain robust, with a large market cap and a respectable dividend yield, the technical signals and option market data suggest that downside risks are being actively managed.

Investors should weigh these factors carefully, balancing TCS’s long-term growth prospects against near-term volatility risks. Monitoring open interest trends and strike price concentrations in the options market can provide valuable insights into evolving market sentiment and potential price movements.

As always, a diversified approach and prudent risk management remain essential when navigating the complexities of large-cap IT stocks in the current market environment.

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