Alkem Laboratories Declines 4.98%: 4 Key Factors Shaping This Week’s Volatility

Strong Start to the Week on 9-11 February

Alkem Laboratories began the week on a positive note, with the stock rising steadily from Rs.5,746.65 on 9 February (+1.09%) to a peak of Rs.5,887.85 on 11 February (+1.28%). This three-day rally outpaced the Sensex, which gained a cumulative 1.42% over the same period. The stock’s gains were supported by robust volume on 9 and 11 February, signalling investor confidence and momentum. During this period, the stock traded comfortably above its key moving averages, reinforcing a bullish technical setup.

12 February: Open Interest Surge Amid Mixed Signals

On 12 February, despite a minor price decline of 0.50% to Rs.5,858.30, Alkem Laboratories saw a notable 10.05% increase in open interest in its derivatives segment, rising from 13,890 to 15,286 contracts. Futures volume was strong at 6,796 contracts, with a futures value of ₹11,622.44 lakhs and options notional value reaching approximately ₹3,868.98 crores. This surge indicated heightened speculative and hedging activity, suggesting that traders were actively repositioning amid mixed market signals.

However, the stock underperformed both its sector and the Sensex on this day, with delivery volumes dropping sharply by 60.89%, signalling reduced investor participation in the cash market. The price dip alongside rising derivatives activity suggested a complex market dynamic, with some participants possibly booking profits while others established fresh positions anticipating further moves.

13 February: Sharp Decline and Volatile Trading

The stock faced significant pressure on 13 February, closing at Rs.5,401.55, down 7.80% on the day and 4.98% for the week. Intraday, it hit a low of Rs.5,596.10, reflecting a 5.09% drop from the previous close. This decline was sharper than the Pharmaceuticals & Biotechnology sector’s fall of 0.87% and the Sensex’s 1.40% drop, highlighting Alkem’s relative underperformance.

Open interest surged dramatically by 29.8% to 19,769 contracts, with futures and options volumes reaching 43,377 contracts and a combined derivatives turnover of ₹40,128.49 lakhs. The futures segment alone accounted for ₹35,927.64 lakhs, while options notional value soared to ₹27,441.70 crores. This spike amid falling prices suggested fresh short positions or protective hedging strategies, reflecting bearish sentiment or anticipation of further volatility.

Technically, the stock traded below its 5-, 20-, 50-, and 100-day moving averages but remained above the 200-day average, indicating weakening short- and medium-term momentum but some long-term support. Delivery volumes continued to decline, down 58.56% from the five-day average, implying reduced long-term investor holding.

Q3 FY26 Results: Profit Decline Despite Revenue Growth

Adding to the pressure, Alkem Laboratories reported its Q3 FY26 results on 13 February, revealing a 16.87% quarter-on-quarter decline in profit despite revenue growth. This earnings setback contributed to the negative sentiment and likely intensified selling pressure. The results underscored challenges in maintaining profitability amid a competitive and volatile pharmaceutical sector environment.

Daily Price Comparison: Alkem Laboratories vs Sensex

Key Takeaways

Positive Signals: The stock’s initial gains early in the week demonstrated underlying strength and investor interest, supported by trading above key moving averages and strong volume. The long-term technical support above the 200-day moving average remains intact, providing a potential floor amid volatility.

Cautionary Signals: The sharp declines on 12 and 13 February, coupled with a 29.8% surge in open interest and falling delivery volumes, indicate increased speculative activity and bearish positioning. The Q3 profit decline despite revenue growth adds fundamental pressure. The stock’s underperformance relative to the sector and Sensex highlights near-term challenges and heightened volatility risk.

Investors should note the mixed technical picture, with short- and medium-term momentum weakening while long-term support persists. The Mojo Score of 62.0 and Hold rating reflect this cautious stance, suggesting a need for careful monitoring of price action and market developments before making fresh commitments.

Conclusion

Alkem Laboratories Ltd’s week was characterised by a strong start followed by significant volatility and a notable price correction. The surge in derivatives open interest and volumes amid falling prices signals active repositioning by traders, likely reflecting a blend of hedging and bearish bets. The disappointing quarterly profit results further weighed on sentiment, contributing to the stock’s underperformance relative to the broader market and sector peers.

While the stock retains long-term technical support, the short-term outlook remains uncertain with weakening momentum and reduced investor participation in the cash segment. The Hold mojo grade underscores a neutral view, advising investors to exercise caution and closely track market signals and company fundamentals in the coming weeks.

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