Open Interest and Volume Dynamics
On 20 Feb 2026, Tech Mahindra’s open interest (OI) in futures and options contracts rose sharply to 70,344 from 63,782 the previous day, marking an absolute increase of 6,562 contracts or 10.29%. This expansion in OI was accompanied by a futures volume of 60,901 contracts, reflecting robust trading activity. The combined futures and options value stood at approximately ₹19,451.47 crores, underscoring the significant capital flow in the derivatives market for this large-cap software and consulting company.
Interestingly, the underlying stock price has been on a downward trajectory, falling by 0.97% on the day and underperforming its sector by 0.66%. Over the past three consecutive sessions, Tech Mahindra has declined by 4.04%, indicating sustained selling pressure. The stock currently trades below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a bearish technical setup.
Market Positioning and Potential Directional Bets
The rise in open interest amid falling prices often points to fresh short positions being initiated or existing shorts being added to, as traders anticipate further downside. The 10.3% increase in OI suggests that participants are actively positioning themselves for potential declines or volatility in Tech Mahindra’s shares. This is further corroborated by the sharp drop in delivery volumes, which fell by 81.2% to 3.44 lakh shares on 19 Feb compared to the 5-day average, indicating reduced long-term investor participation and possibly increased speculative activity.
Given the stock’s high dividend yield of 3.05%, some investors might be holding for income, but the technical weakness and derivatives activity imply caution. The liquidity profile remains adequate, with the stock capable of supporting trades up to ₹8.56 crores based on 2% of the 5-day average traded value, ensuring that institutional players can manoeuvre positions without excessive slippage.
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Mojo Score and Analyst Ratings
Tech Mahindra currently holds a Mojo Score of 64.0, placing it in the 'Hold' category, a downgrade from its previous 'Buy' rating as of 16 Feb 2026. This shift reflects a reassessment of the stock’s near-term prospects amid the recent price weakness and derivatives market activity. The company’s market capitalisation stands at ₹1,43,527.93 crores, categorising it as a large-cap stock within the Computers - Software & Consulting sector.
The downgrade to 'Hold' signals that while the company maintains solid fundamentals, the current technical and market positioning factors warrant caution. Investors should weigh the potential for further downside against the stock’s attractive dividend yield and long-term growth prospects.
Sector and Benchmark Comparison
In comparison, the broader sector has declined by 0.52% on the day, while the Sensex gained 0.62%, highlighting Tech Mahindra’s relative underperformance. This divergence emphasises the stock-specific pressures it faces, possibly linked to earnings concerns, sector rotation, or broader market sentiment shifts.
Trading below all major moving averages further accentuates the bearish technical stance, suggesting that the stock may continue to face resistance until it can reclaim these levels. The sustained fall over three sessions and the decline in delivery volumes point to weakening investor conviction, which could exacerbate volatility in the near term.
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Implications for Investors and Traders
The surge in open interest combined with falling prices and reduced delivery volumes suggests that traders are increasingly positioning for downside or hedging existing long exposures. This environment typically favours short-term traders and option sellers who anticipate continued volatility or a correction.
Long-term investors should monitor whether the stock can stabilise above key moving averages and whether delivery volumes recover, signalling renewed buying interest. The current dividend yield of 3.05% provides some cushion, but it may not be sufficient to offset capital losses if the downtrend persists.
Given the large-cap status and sector fundamentals, Tech Mahindra remains a key player in the software and consulting space. However, the recent derivatives market activity and technical indicators suggest a cautious approach is warranted until clearer signs of a reversal emerge.
Conclusion
Tech Mahindra’s recent 10.3% increase in open interest amid a three-day price decline highlights a complex market scenario where bearish bets and hedging strategies are gaining traction. The stock’s underperformance relative to its sector and the broader Sensex, combined with technical weakness and falling delivery volumes, point to a cautious near-term outlook. Investors and traders should closely watch derivatives positioning and volume trends for clues on the stock’s next directional move, balancing the company’s solid fundamentals against prevailing market sentiment.
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