Open Interest and Volume Dynamics
On 19 Feb 2026, Tech Mahindra’s open interest (OI) in derivatives rose sharply to 71,548 contracts from 64,625 the previous day, marking an increase of 6,923 contracts or 10.71%. This rise in OI was accompanied by a futures volume of 61,085 contracts, indicating robust trading activity. The futures value stood at approximately ₹1,86,490 lakhs, while the options segment exhibited an enormous notional value of ₹37,581 crore, reflecting significant investor interest in both futures and options.
Despite this surge in derivatives activity, the underlying stock price declined by 1.12% on the day, underperforming the sector’s modest fall of 0.29% and matching the Sensex’s 1.12% drop. The stock has been on a downward trajectory for two consecutive sessions, losing 2.19% cumulatively. This divergence between rising open interest and falling prices often points to increased short positioning or hedging activity by market participants.
Technical Indicators and Market Sentiment
Tech Mahindra is currently trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup. The stock’s delivery volume on 18 Feb was 10.21 lakh shares, which fell sharply by 43.94% compared to the five-day average delivery volume, indicating waning investor participation in the cash segment. This decline in delivery volume alongside rising derivatives activity suggests that traders may be favouring short-term speculative positions over long-term holdings.
Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹11.26 crore, ensuring that the derivatives market can absorb sizeable positions without undue price impact.
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Market Positioning and Potential Directional Bets
The simultaneous rise in open interest and decline in price typically indicates that fresh short positions are being initiated or that existing shorts are being added to. Given Tech Mahindra’s sector and large-cap status, institutional traders and hedge funds often use derivatives to express bearish views or hedge existing long exposures.
Moreover, the substantial notional value in options suggests that market participants are actively positioning for volatility. The large options value of ₹37,581 crore points to significant open interest in both calls and puts, which could be indicative of straddle or strangle strategies designed to capitalise on expected price swings.
Tech Mahindra’s Mojo Score currently stands at 64.0 with a Mojo Grade of Hold, downgraded from Buy on 16 Feb 2026. This downgrade reflects a cautious stance amid deteriorating price momentum and technical weakness. The market cap grade remains at 1, underscoring its large-cap status but also signalling limited upside potential in the near term given current conditions.
Sector and Broader Market Context
The Computers - Software & Consulting sector has been relatively resilient, but Tech Mahindra’s underperformance by 0.85% relative to its sector peers highlights company-specific challenges or profit-taking. The broader market’s mixed performance, with the Sensex down 1.12%, adds to the cautious sentiment prevailing among investors.
Investors should note that the stock’s consistent trading below all major moving averages and falling delivery volumes suggest a lack of conviction among long-term holders. This environment often favours short-term traders and derivative market participants who seek to exploit volatility and directional moves.
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Implications for Investors
For investors, the current derivatives market activity in Tech Mahindra signals caution. The rising open interest amid falling prices suggests that bearish bets are gaining traction. Traders should closely monitor the stock’s price action relative to key support levels and watch for any reversal signals before considering fresh long positions.
Given the stock’s downgrade to Hold and the technical weakness, investors may prefer to reduce exposure or hedge existing positions using options strategies. The large options open interest provides ample liquidity for such hedging instruments.
Long-term investors should also be mindful of the declining delivery volumes, which indicate reduced participation from committed shareholders. This could translate into increased volatility and sharper price movements in the near term.
Conclusion
Tech Mahindra’s recent surge in open interest in the derivatives market, combined with its underperformance and technical deterioration, paints a picture of growing bearish sentiment among traders. While the stock remains a large-cap heavyweight in the Computers - Software & Consulting sector, current market positioning suggests that investors should exercise prudence and consider risk management strategies amid heightened volatility.
Monitoring future open interest trends, volume patterns, and price action will be crucial to gauge whether this bearish momentum sustains or if a reversal is on the horizon.
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