Alkem Laboratories Sees Sharp Open Interest Surge Amid Rising Market Momentum

Open Interest and Volume Dynamics

On 23 Feb 2026, Alkem Laboratories recorded an open interest (OI) of 21,274 contracts, up sharply from 17,449 the previous day, marking a 3,825 contract increase or 21.92%. This substantial rise in OI was accompanied by a volume of 21,487 contracts, indicating strong participation in the derivatives market. The futures segment alone accounted for ₹55,731.42 lakhs in value, while options contributed an overwhelming ₹9,015.27 crores, culminating in a total derivatives value of approximately ₹56,153.98 lakhs.

The underlying stock price closed at ₹5,493, outperforming the Pharmaceuticals & Biotechnology sector by 1.39% and the broader Sensex by 1.5 times, with a 1.84% daily return compared to the sector’s 0.50% and Sensex’s 0.44%. This outperformance, coupled with rising OI and volume, suggests that market participants are positioning for further upside in Alkem Laboratories.

Market Positioning and Directional Bets

The surge in open interest alongside rising volumes typically indicates fresh money entering the market rather than short-covering. In Alkem’s case, the 21.9% increase in OI suggests that traders are building new positions, likely anticipating a continuation of the recent upward momentum. The stock has gained for two consecutive sessions, delivering a cumulative return of 2.15%, supported by a 45.16% jump in delivery volume to 1.86 lakh shares on 20 Feb 2026 compared to the five-day average.

Technical indicators reveal that Alkem’s price is trading above its 5-day and 200-day moving averages but remains below the 20-day, 50-day, and 100-day averages. This mixed moving average picture points to a short-term bullish bias within a longer-term consolidation phase. The rising delivery volumes and open interest reinforce the notion of increased investor conviction, possibly driven by positive fundamentals or sector tailwinds.

Mojo Score and Rating Revision

Despite the positive price action and derivatives activity, Alkem Laboratories’ Mojo Score currently stands at 52.0, with a Mojo Grade downgraded from Buy to Hold as of 1 Dec 2025. The downgrade reflects a more cautious outlook based on a combination of valuation, momentum, and quality metrics. The company holds a Market Cap Grade of 2, categorising it as a mid-cap stock with a market capitalisation of ₹65,653.14 crores.

This rating adjustment suggests that while the stock shows potential for gains, investors should remain vigilant about valuation risks and sector-specific challenges. The pharmaceutical industry continues to face regulatory scrutiny and pricing pressures, which could temper upside despite the current bullish positioning in derivatives.

Implications for Investors and Traders

The sharp increase in open interest and volume in Alkem Laboratories’ derivatives signals a growing conviction among traders about the stock’s near-term prospects. Such activity often precedes significant price moves, as fresh capital flows into the market. Investors should monitor the evolving OI trends alongside price action to gauge whether the bullish momentum sustains or if profit-taking emerges.

Given the stock’s current position above short-term moving averages and the recent delivery volume spike, the market appears to favour accumulation. However, the Hold rating and moderate Mojo Score counsel prudence, especially considering the stock’s valuation and sector risks. Traders might consider strategies that capitalise on directional bets, such as long futures or call options, while managing downside risk through protective puts or stop-loss orders.

Sector Context and Comparative Performance

Within the Pharmaceuticals & Biotechnology sector, Alkem Laboratories has outperformed peers on the day, with a 1.94% gain versus the sector’s 0.50%. This relative strength is noteworthy given the sector’s recent volatility amid regulatory developments and global supply chain concerns. Alkem’s ability to sustain gains and attract derivatives interest may reflect confidence in its product pipeline, operational efficiency, or strategic initiatives.

Investors should also consider broader market conditions, as the Sensex’s modest 0.44% gain indicates a cautious but positive environment. The stock’s liquidity profile supports sizeable trades, with a 2% threshold of the five-day average traded value allowing for Rs 1.95 crore trade sizes without significant market impact.

Outlook and Strategic Considerations

Looking ahead, the derivatives market activity in Alkem Laboratories suggests that investors are positioning for a potential continuation of the recent rally. However, the mixed technical signals and Hold rating imply that gains may be tempered by profit-booking or sector headwinds. Investors should closely track open interest changes, volume patterns, and price movements to identify shifts in market sentiment.

For those with a bullish outlook, the current environment offers opportunities to establish or add to positions with defined risk management. Conversely, cautious investors may prefer to await confirmation of sustained momentum or improved fundamental signals before committing additional capital.

Overall, Alkem Laboratories remains a key stock to watch within the Pharmaceuticals & Biotechnology sector, with its derivatives market activity providing valuable insights into investor psychology and potential price trajectories.

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