Tata Consultancy Services Sees Robust Call Option Activity Amid Mixed Technical Signals

Robust Call Option Activity Highlights Investor Sentiment

The most active call options for TCS are centred on the 30 March 2026 expiry, with the ₹2,700 strike price attracting the highest volume. A total of 3,765 contracts were traded, generating a turnover of approximately ₹476.37 lakhs. Open interest at this strike stands at 7,336 contracts, underscoring sustained investor interest and positioning ahead of expiry. This level of activity is particularly significant given the underlying stock price of ₹2,668, indicating that market participants are betting on a price appreciation beyond the strike within the next month.

Stock Performance and Technical Context

TCS closed the latest session at ₹2,668, just 3.64% above its 52-week low of ₹2,561.3. The stock has recorded a modest 1.13% gain on the day, slightly outperforming the sector’s 1.12% rise and the broader Sensex’s 0.24% advance. Over the past two trading days, TCS has delivered a cumulative return of 3.28%, signalling a tentative recovery from recent lows.

However, the technical picture remains cautious. The stock is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — suggesting that the broader trend is still under pressure. Additionally, investor participation appears to be waning, with delivery volumes on 25 February falling by 30.22% compared to the five-day average, indicating reduced conviction among long-term holders.

Dividend Yield and Liquidity Considerations

One of the attractive features of TCS at current levels is its high dividend yield of 4.15%, which provides a cushion for investors amid volatility. The stock’s liquidity remains robust, with a trading capacity of approximately ₹24.21 crore based on 2% of the five-day average traded value, ensuring that sizeable trades can be executed without significant market impact.

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 51.0. This reflects a stabilisation in the company’s fundamentals and valuation metrics, although the Market Cap Grade remains at 1, indicating that the stock is still considered a large-cap heavyweight with limited upside from a market capitalisation perspective. The upgrade suggests that while the stock is no longer a sell, investors should maintain a cautious stance and monitor developments closely.

Options Market as a Barometer of Bullish Positioning

The concentration of call option activity at the ₹2,700 strike price, which is approximately 1.2% above the current underlying price, signals that traders are positioning for a moderate upside in the coming weeks. The sizeable open interest and turnover imply that institutional and retail investors alike are hedging or speculating on a rebound, possibly anticipating positive earnings updates or sectoral tailwinds.

Expiry patterns also suggest that March 2026 is a focal point for option traders, with the expiry date less than five weeks away. This timing aligns with the company’s typical quarterly results announcement cycle, which could act as a catalyst for price movement.

Sector and Market Context

Within the Computers - Software & Consulting sector, TCS’s performance is inline with peers, but its recent gains have slightly outpaced the sector average. The sector itself has been buoyed by renewed demand for digital transformation services and increased IT spending globally. However, macroeconomic uncertainties and currency fluctuations continue to pose risks.

Against the broader Sensex, TCS’s relative outperformance on the day highlights its defensive qualities as a large-cap IT bellwether, attracting investors seeking stability amid market volatility.

Investor Takeaway: Balancing Caution with Opportunity

While TCS’s recent call option activity points to a cautiously optimistic outlook, investors should weigh this against the stock’s technical weaknesses and subdued investor participation. The high dividend yield offers some income stability, but the stock’s proximity to its 52-week low and trading below all major moving averages suggest that a sustained recovery is not guaranteed.

For investors with a medium-term horizon, the current options market positioning could provide a useful gauge of market expectations, especially as the March expiry approaches. Those considering fresh exposure should monitor upcoming earnings and sector developments closely, while also keeping an eye on broader market trends.

In summary, Tata Consultancy Services Ltd. remains a key player in the IT sector with a mixed technical outlook but growing bullish sentiment in the options market, signalling potential for measured upside in the near term.

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