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

Put Option Activity Highlights

Data from the latest trading session reveals that TCS put options expiring on 24 February 2026 have attracted substantial interest, with total turnover exceeding ₹3,328 lakhs across key strike prices. The most actively traded put contract was at the ₹2,700 strike, with 7,071 contracts changing hands, generating a turnover of ₹1,536.39 lakhs and an open interest of 6,333 contracts. This strike price is notably above the current underlying value of ₹2,626, indicating a strong bearish hedge or speculative positioning anticipating a further decline.

Other significant put strikes include ₹2,620 (4,221 contracts, ₹578.01 lakhs turnover), ₹2,560 (4,503 contracts, ₹441.37 lakhs turnover), ₹2,500 (8,614 contracts, ₹566.20 lakhs turnover), and ₹2,400 (5,974 contracts, ₹206.16 lakhs turnover). The open interest at these strikes ranges from 633 to 1,563 contracts, underscoring sustained investor interest in downside protection or bearish bets.

Price Action and Market Context

TCS has been under pressure recently, hitting a new 52-week low of ₹2,585 on 13 February 2026. The stock has declined by 12.74% over the past three trading days, underperforming its sector by 0.67% and the broader Sensex by 4.01%. On the day of the data, TCS opened with a gap down of 6%, touching an intraday low of ₹2,585 before closing near the lows. The stock is trading below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), signalling a bearish technical setup.

The IT software sector itself has declined by 4.41% on the day, reflecting broader investor risk aversion in technology stocks. Despite the weakness, TCS continues to offer a relatively high dividend yield of 3.96%, which may provide some income cushion for long-term investors.

Investor Participation and Liquidity

Investor participation has surged, with delivery volumes rising to 65.68 lakh shares on 12 February 2026, a 171.64% increase over the five-day average. This heightened activity suggests that market participants are actively repositioning their portfolios in response to the recent price decline and uncertain outlook.

Liquidity remains robust, with the stock’s average traded value supporting trade sizes of up to ₹30.35 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 a previous 'Sell' rating on 22 April 2025. The company’s market cap grade remains at 1, reflecting its status as a large-cap heavyweight with a market capitalisation of approximately ₹9,95,662 crore. Despite the recent downgrade in sentiment, the stock’s fundamentals remain solid, though the technical and options market data suggest caution in the near term.

Bearish Positioning and Hedging Implications

The concentration of put option activity at strikes above and near the current market price indicates that investors are either hedging existing long positions or speculating on further downside. The highest open interest at the ₹2,700 strike, well above the current price, suggests a significant number of investors are protecting against a potential drop exceeding 8% from current levels.

Moreover, the substantial volume at the ₹2,500 and ₹2,400 strikes points to layered hedging strategies, possibly reflecting a range of risk tolerances among market participants. This layered put buying could also be interpreted as a signal of expected volatility or a cautious stance amid uncertain macroeconomic or sector-specific developments.

Sectoral and Broader Market Comparison

While TCS has underperformed the IT software sector by a small margin, the sector itself has been hit by a 4.41% decline, indicating that the weakness is not isolated. The Sensex’s relatively modest fall of 0.98% underscores that the IT sector is facing sector-specific headwinds, possibly related to global technology demand concerns, currency fluctuations, or regulatory developments.

Investors should weigh these factors carefully, especially given TCS’s large market cap and its role as a bellwether for the Indian IT industry. The stock’s current technical weakness and heavy put option interest suggest that downside risks remain elevated in the short term.

Outlook and Investor Considerations

Given the current market dynamics, investors should approach TCS with caution. The stock’s technical indicators, including trading below all major moving averages and recent 52-week lows, combined with heavy put option activity, suggest a bearish near-term outlook. However, the company’s strong fundamentals, large market cap, and attractive dividend yield provide a counterbalance for long-term holders.

Traders and portfolio managers may consider using put options as a hedging tool to protect against further downside, especially with the 24 February 2026 expiry approaching. The layered strike prices offer flexibility in managing risk exposure depending on individual risk appetite and market view.

Ultimately, monitoring the evolving open interest and volume trends in TCS options, alongside broader sector and market developments, will be crucial for making informed investment decisions.

Summary

Tata Consultancy Services Ltd. is currently experiencing a notable surge in bearish put option activity, reflecting investor caution amid recent price declines and sector weakness. The concentration of put contracts at strikes above the current market price highlights a defensive stance, with investors seeking protection or positioning for further downside. While the stock’s fundamentals remain intact, technical signals and options market data suggest that downside risks are elevated in the near term. Investors should carefully balance these factors when considering exposure to this large-cap IT software leader.

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