Tata Consultancy Services Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

Data from the options market reveals that TCS put options expiring on 24 February 2026 have attracted substantial volumes. The most actively traded put contracts are clustered around the ₹2800, ₹2900, and ₹3000 strike prices, with the ₹2900 strike leading in terms of contracts traded. Specifically, 8,303 contracts were traded at the ₹2900 strike, generating a turnover of approximately ₹795.1 lakhs and an open interest of 4,477 contracts. The ₹3000 strike saw 5,372 contracts traded, with a turnover nearing ₹978.8 lakhs and open interest standing at 7,201 contracts. Meanwhile, the ₹2800 strike recorded 4,083 contracts traded, turnover of ₹180.6 lakhs, and open interest of 5,045 contracts.

These figures underscore a pronounced bearish sentiment, as investors appear to be positioning for potential downside or seeking protection against further declines. The underlying value of TCS at ₹2,934 as of 6 February 2026 places the ₹2900 and ₹3000 strikes slightly out-of-the-money and at-the-money respectively, making these puts attractive for hedging or speculative bearish bets.

Price and Technical Context

TCS has been under pressure in recent sessions, with the stock declining by 2.34% on the day and closing near its 52-week low, just 2.3% above the low of ₹2,866.6. The stock has recorded a consecutive three-day fall, losing 9.03% over this period, reflecting weakening investor confidence. Intraday lows touched ₹2,918.1, marking a 2.45% drop from the previous close.

Technical indicators reinforce this bearish outlook. TCS is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained downward momentum. Additionally, investor participation has waned, with delivery volumes on 5 February falling by 38.08% compared to the five-day average, suggesting reduced conviction among buyers.

Despite these headwinds, TCS maintains a relatively high dividend yield of 3.64%, which may provide some cushion for long-term investors. The stock’s liquidity remains robust, with a trade size capacity of approximately ₹32.5 crores based on 2% of the five-day average traded value, ensuring ease of entry and exit for market participants.

Investor Positioning and Market Implications

The heavy put option activity at strikes above and near the current market price suggests that investors are either hedging existing long positions or speculating on further downside. The open interest figures, particularly the 7,201 contracts at the ₹3000 strike, indicate a significant build-up of bearish bets. This is notable given that the ₹3000 strike is slightly above the current underlying price, implying that investors expect the stock to test or breach this level before expiry.

Such positioning often precedes increased volatility, as option sellers and buyers adjust their hedges in response to price movements. The clustering of open interest at multiple strikes also points to a broad range of investor expectations, with some anticipating a moderate decline towards ₹2800, while others are bracing for a sharper correction below ₹2900.

Fundamental and Sectoral Considerations

TCS operates within the Computers - Software & Consulting sector, which has experienced mixed performance amid global economic uncertainties and evolving technology demand. The company’s market capitalisation stands at a substantial ₹10,60,244.37 crores, categorising it as a large-cap stock with significant institutional interest.

MarketsMOJO assigns TCS a Mojo Score of 51.0 and a Mojo Grade of Hold, upgraded from a previous Sell rating on 22 April 2025. This reflects a cautious stance, balancing the company’s strong fundamentals against recent price weakness and sector headwinds. The market cap grade of 1 further underscores its large-cap status, which typically entails lower volatility but also slower price appreciation in turbulent markets.

Expiry Patterns and Strategic Outlook

The 24 February 2026 expiry is attracting concentrated put option interest, which is typical as investors position ahead of monthly expiries to manage risk or capitalise on expected price moves. The significant open interest at multiple strikes suggests that traders are actively managing their portfolios with a focus on downside protection.

Given the current technical weakness and the clustering of put options, investors should monitor price action closely in the coming weeks. A breach below the ₹2866.6 52-week low could trigger further selling pressure, while a rebound above the ₹3000 level may alleviate some bearish sentiment. The interplay between option expiry dynamics and underlying price movements will be critical in shaping TCS’s near-term trajectory.

Conclusion

Tata Consultancy Services Ltd. is currently navigating a challenging phase marked by heavy put option activity and bearish technical signals. The surge in put contracts at strikes near and above the current market price reflects investor caution and hedging strategies amid recent declines. While the company’s fundamentals remain robust, the market is pricing in near-term risks that warrant close attention.

For investors, understanding the implications of this options activity is crucial for managing exposure and identifying potential entry or exit points. The evolving expiry patterns and open interest concentrations provide valuable insights into market sentiment and possible price directions as February expiry approaches.

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