Tata Consultancy Services Sees Surge in Put Option Activity Amid Bearish Sentiment

Intense Put Option Trading Signals Bearish Sentiment

Data from the options market reveals that TCS’s put options have been the most actively traded among its peers, with significant volumes concentrated around strike prices close to the current underlying value of ₹2,788.3. The most traded put contracts for the 24 February expiry include strikes at ₹2,600, ₹2,720, ₹2,760, ₹2,780, and ₹2,820, cumulatively accounting for over 21,000 contracts traded in recent sessions.

Notably, the ₹2,600 strike saw 4,905 contracts traded, generating a turnover of ₹10.44 crores, while the ₹2,820 strike recorded 4,228 contracts with a turnover exceeding ₹51.29 crores. The ₹2,780 and ₹2,760 strikes also attracted heavy volumes, with 3,952 and 4,444 contracts traded respectively, indicating a broad range of bearish bets spanning slightly out-of-the-money to near-the-money strikes.

Open interest figures further underscore this trend, with the ₹2,600 and ₹2,720 strikes holding open interest of 2,394 and 2,300 contracts respectively, suggesting sustained interest and potential accumulation of bearish positions or protective hedges by market participants.

Price Action and Technical Weakness Reinforce Bearish Outlook

TCS’s stock price has been under pressure, hitting a new 52-week low of ₹2,780.1 on 12 February 2026. The stock has declined by 6.61% over the past two trading days, underperforming its sector which fell by 3.73% on the same day. Intraday lows have consistently tested support levels near the ₹2,780 mark, with weighted average traded prices skewed towards these lows, indicating selling dominance.

Technical indicators paint a cautious picture: TCS is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling a sustained downtrend. This technical deterioration aligns with the increased put option activity, as investors seek downside protection or speculate on further declines.

Liquidity remains robust, with a delivery volume of 22.94 lakh shares on 11 February, though this represents a 30.47% decline against the five-day average delivery volume, suggesting waning investor participation amid the recent sell-off.

Mojo Score Upgrade Reflects Mixed Market Sentiment

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. Despite the upgrade, the stock’s Market Cap Grade remains at 1, reflecting its large-cap status with a market capitalisation of ₹10,52,646 crores. The Hold rating suggests cautious optimism, balancing the company’s strong fundamentals against near-term technical and market headwinds.

Investors should note the stock’s attractive dividend yield of 3.75% at current prices, which may provide some cushion amid volatility. However, the recent price weakness and heavy put option activity indicate that market participants are bracing for potential further downside or are actively hedging existing long positions.

Expiry Patterns and Strike Price Concentration

The concentration of put option volumes around strikes ranging from ₹2,600 to ₹2,820 ahead of the 24 February expiry suggests that traders are positioning for a possible correction or consolidation phase. The highest turnover at the ₹2,820 strike, which is slightly above the current underlying price, indicates that some investors may be speculating on a moderate pullback or are seeking insurance against a decline below this level.

Open interest data corroborates this, with significant open interest at the ₹2,600 and ₹2,720 strikes, implying that these levels are being closely watched as potential support zones or targets for bearish strategies.

Sector and Market Context

The IT - Software sector has broadly declined by 3.73% on the day, with TCS underperforming slightly at -3.86%. The Sensex, by comparison, has seen a modest fall of 0.45%, highlighting sector-specific pressures possibly linked to global tech demand concerns or domestic macroeconomic factors.

Given TCS’s leadership position in the sector, its price action and options market activity often serve as a barometer for investor sentiment towards Indian IT stocks. The current bearish tilt in options trading may reflect broader worries about near-term earnings growth or margin pressures.

Investor Implications and Outlook

For investors, the surge in put option activity at multiple strike prices signals heightened caution. Those holding long positions in TCS may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk. Conversely, traders with a bearish outlook might view the current elevated put volumes as confirmation of a potential correction or consolidation phase.

However, the stock’s strong dividend yield and large-cap status provide some defensive qualities. Investors should closely monitor upcoming quarterly results and sectoral developments, as any positive surprises could quickly reverse the current bearish sentiment.

Overall, the options market data combined with technical weakness suggests that TCS is navigating a challenging near-term environment, with investors balancing between hedging and speculative bearish positioning ahead of the February expiry.

Summary

Tata Consultancy Services Ltd. is currently experiencing significant put option trading activity, reflecting a cautious or bearish stance among investors. The concentration of trades around strikes near the current price, combined with technical indicators showing weakness and a recent 52-week low, underscores the market’s concern about the stock’s short-term prospects. While the company’s fundamentals remain robust, the options market signals a need for vigilance and strategic positioning as expiry approaches.

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