Tata Motors Passenger Vehicles Sees Surge in Call Option Activity Ahead of January Expiry

Robust Call Option Activity Highlights Investor Sentiment

The most active call options for Tata Motors Passenger Vehicles Ltd are concentrated around the 370 strike price, with expiry set for 27 January 2026. On this expiry date, a total of 2,464 contracts were traded, generating a turnover of ₹16.20 crores. Open interest stands at 5,209 contracts, reflecting sustained interest and potential accumulation by market participants anticipating upward price movement.

With the underlying stock price at ₹361.95, the 370 strike calls are positioned slightly out-of-the-money, indicating that traders are betting on a moderate price appreciation over the next month. This level of activity in call options suggests a bullish sentiment prevailing among options traders, who may be positioning for a rally in the near term.

Stock Performance and Technical Landscape

On the day in question, Tata Motors Passenger Vehicles Ltd recorded a modest gain of 0.14%, marginally outperforming the sector’s decline of 0.19% and closely tracking the Sensex’s 0.17% rise. The stock has been on a two-day consecutive gain streak, delivering a cumulative return of 1.09% during this period. This short-term momentum is supported by the stock trading above its 5-day and 20-day moving averages, signalling some immediate buying interest.

However, the stock remains below its longer-term moving averages — the 50-day, 100-day, and 200-day — which tempers the bullish outlook and suggests that the broader trend is still under pressure. Investors should note this divergence between short-term strength and longer-term resistance levels, which could lead to volatility in coming weeks.

Rising Investor Participation and Liquidity

Investor participation has notably increased, with delivery volumes reaching 89.15 lakh shares on 30 December, marking a 40.99% rise compared to the five-day average delivery volume. This surge in delivery volume indicates genuine accumulation rather than speculative trading, which is a positive sign for the stock’s underlying demand.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹8.49 crores based on 2% of the five-day average traded value. This liquidity profile ensures that institutional and retail investors can enter or exit positions without significant price impact.

Fundamental Rating Downgrade and Market Capitalisation Context

Despite the recent bullish activity in the options market, Tata Motors Passenger Vehicles Ltd’s fundamental outlook has deteriorated. The company’s Mojo Score currently stands at 36.0, with a Mojo Grade of Sell, downgraded from Hold on 4 November 2024. This downgrade reflects concerns over the company’s financial health, operational challenges, or valuation metrics that have weakened since the previous assessment.

The stock is classified as a large-cap company with a market capitalisation of ₹1,33,116 crores, placing it among the heavyweight constituents of the automobile sector. However, its Market Cap Grade is rated at 1, indicating that despite its size, the stock may not be delivering commensurate returns or quality metrics relative to its peers.

Options Expiry Patterns and Investor Positioning

The expiry date of 27 January 2026 for the most active call options provides a medium-term horizon for investors to gauge the stock’s price trajectory. The concentration of open interest at the 370 strike price suggests that traders expect the stock to breach this level within the next month. This is a critical resistance point to watch, as a sustained move above ₹370 could trigger further bullish momentum and potentially attract fresh buying interest.

Conversely, failure to surpass this strike price by expiry could result in these call options expiring worthless, which may lead to profit-taking and increased volatility. Investors should monitor open interest changes and volume trends closely to assess shifts in market sentiment.

Comparative Sector and Index Performance

In comparison to the broader automobile sector, which declined by 0.19% on the day, Tata Motors Passenger Vehicles Ltd’s slight gain of 0.14% is a relative outperformance. The Sensex’s 0.17% rise further underscores the stock’s alignment with broader market trends, albeit with a cautious undertone given the fundamental downgrade.

Such relative strength amid sector weakness may attract tactical traders looking to capitalise on short-term momentum, especially given the rising delivery volumes and call option activity.

Investor Takeaway and Outlook

While the surge in call option activity around the 370 strike price and rising delivery volumes indicate a degree of bullishness among traders, the fundamental downgrade and mixed technical signals counsel caution. Investors should weigh the short-term momentum against the longer-term challenges facing Tata Motors Passenger Vehicles Ltd.

For those considering exposure, it is advisable to monitor the stock’s ability to break above key resistance levels, particularly the 370 mark, and to track changes in open interest and volume in the options market. Given the stock’s liquidity and large-cap status, it remains a viable candidate for tactical trades, but a comprehensive risk assessment is essential.

Overall, the current market dynamics suggest a nuanced outlook where bullish positioning in derivatives coexists with fundamental concerns, underscoring the importance of a balanced investment approach.

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