Tata Consultancy Services Sees Robust Call Option Activity Ahead of January Expiry

Robust Call Option Activity Signals Bullish Sentiment

The most active call option for TCS is the January 27 expiry with a strike price of ₹3,300. On 7 January 2026, this contract saw 5,841 contracts traded, generating a turnover of approximately ₹46.75 crores. The open interest stands at 14,289 contracts, indicating sustained interest and potential accumulation at this strike level. Given that the underlying stock price was ₹3,259.50 at the time, the ₹3,300 strike is positioned just slightly out of the money, suggesting traders are anticipating a near-term upside move.

This heightened activity in call options is often interpreted as a bullish signal, with investors and traders hedging or speculating on a price rise. The concentration of open interest at this strike price also implies that market makers and institutional players may be expecting the stock to test or surpass this level by expiry.

Stock Performance and Technical Indicators

Despite the bullish options positioning, TCS has underperformed its sector by 0.58% on the day, with a modest gain of 0.27% compared to the sector’s 0.81% rise. However, the stock has recorded consecutive gains over the past two sessions, delivering a cumulative return of 1.64%. This suggests a cautious but positive momentum building in the near term.

Technically, TCS is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — which is a strong indicator of an ongoing uptrend. The rising investor participation is further evidenced by a delivery volume of 21.9 lakh shares on 6 January, marking a 47.99% increase over the five-day average delivery volume. This surge in delivery volume points to genuine buying interest rather than speculative trading alone.

Dividend Yield and Market Capitalisation

Adding to its appeal, TCS offers a high dividend yield of 3.93% at the current price level, which is attractive for income-focused investors. The company’s market capitalisation stands at a commanding ₹11,77,959 crore, categorising it firmly as a large-cap stock with significant liquidity. The stock’s liquidity is robust enough to support trade sizes of up to ₹15 crore based on 2% of the five-day average traded value, making it accessible for institutional and retail investors alike.

Mojo Score Upgrade Reflects Improving Fundamentals

MarketsMOJO’s latest assessment upgraded TCS’s Mojo Grade from Sell to Hold on 22 April 2025, with a current Mojo Score of 65.0. This improvement reflects a stabilising outlook amid evolving market conditions. The company’s Market Cap Grade remains at 1, underscoring its status as a large-cap heavyweight with strong institutional backing.

While the Hold rating suggests caution, it also indicates that the stock is no longer viewed negatively by the rating agency. Investors should note that the upgrade coincides with the recent uptick in call option activity, hinting at a possible shift in market sentiment towards a more constructive stance.

Expiry Patterns and Investor Positioning

The January 27 expiry is a critical date for TCS options traders. The concentration of open interest at the ₹3,300 strike price suggests that many investors are positioning for a breakout above this level. Given the underlying price of ₹3,259.50, a move beyond ₹3,300 would represent a near-term gain of approximately 1.24%, which is plausible given the stock’s recent momentum and technical strength.

Options traders often use such strike prices as key reference points for hedging or speculative strategies. The large number of contracts traded and the substantial turnover indicate active participation from both retail and institutional players, signalling confidence in the stock’s ability to sustain or accelerate its upward trajectory.

Sector and Market Context

TCS operates within the Computers - Software & Consulting sector, which has generally exhibited resilience amid broader market volatility. The sector’s 1-day return of 0.81% outpaced the Sensex’s marginal decline of 0.12%, highlighting relative strength. TCS’s slight underperformance relative to its sector on the day may represent a temporary consolidation before further gains.

Investors should consider the broader technology sector trends and global IT spending patterns, which continue to support demand for software and consulting services. TCS’s strong fundamentals, combined with its dividend yield and liquidity profile, make it a compelling candidate for medium to long-term portfolios.

Investor Takeaway

For investors and traders, the surge in call option activity at the ₹3,300 strike price ahead of the January 27 expiry is a clear indication of bullish positioning in TCS. The stock’s technical strength, rising delivery volumes, and attractive dividend yield provide a solid foundation for potential upside.

However, the Hold rating from MarketsMOJO and the recent underperformance relative to the sector counsel a measured approach. Investors should monitor price action closely around the ₹3,300 level and consider broader market conditions before committing significant capital.

Given the stock’s liquidity and large market capitalisation, TCS remains a viable option for both conservative and aggressive investors seeking exposure to India’s leading IT services company.

Looking Ahead

As the January expiry approaches, market participants will be watching TCS closely for signs of a breakout or reversal. The current open interest and turnover data suggest that the ₹3,300 strike price will be a key battleground. Should the stock breach this level convincingly, it could trigger further call buying and a sustained rally.

Conversely, failure to surpass this strike may lead to profit-taking and a potential pullback. Investors should remain vigilant and consider hedging strategies to manage risk in this dynamic environment.

Summary

Tata Consultancy Services Ltd. is currently at a pivotal juncture, with strong call option activity signalling bullish sentiment ahead of the January 27, 2026 expiry. The stock’s technical indicators, rising investor participation, and attractive dividend yield support a positive outlook, although the Hold rating advises caution. Market participants should watch the ₹3,300 strike price closely as a key indicator of near-term direction.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →