Open Interest and Volume Dynamics
On 18 February 2026, Bandhan Bank's open interest (OI) in derivatives rose sharply from 38,558 contracts to 44,504, marking an increase of 5,946 contracts or 15.42%. This surge in OI was accompanied by a futures volume of 23,812 contracts, reflecting active participation in the derivatives market. The futures value stood at approximately ₹80,575 lakhs, while the options segment exhibited a substantial notional value of ₹6,846 crores, culminating in a total derivatives market value of ₹81,631 lakhs for the stock.
The underlying stock price closed at ₹171, showing a modest 0.09% gain on the day, outperforming its sector by 0.89% and the broader Sensex, which declined by 0.85%. However, the stock reversed its three-day consecutive gains, indicating some profit booking or cautious sentiment among investors.
Market Positioning and Directional Bets
The increase in open interest alongside rising volume typically suggests fresh positions being initiated rather than existing ones being squared off. In Bandhan Bank's case, this could imply that traders are either building bullish or bearish bets in anticipation of near-term price movements. Given the stock's trading above all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—the technical backdrop remains positive, favouring a bullish bias.
Nonetheless, the recent price pullback after a short rally and a significant 56.06% decline in delivery volume to 31.81 lakh shares compared to the 5-day average delivery volume indicates waning investor participation in the cash segment. This divergence between derivatives activity and cash market participation may reflect speculative positioning or hedging strategies rather than broad-based buying interest.
Liquidity and Trade Size Considerations
Liquidity metrics remain favourable for Bandhan Bank, with the stock's traded value supporting a trade size of approximately ₹3.12 crore based on 2% of the 5-day average traded value. This level of liquidity is adequate for institutional and retail traders to execute sizeable trades without significant market impact, which could be a factor encouraging increased derivatives activity.
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Mojo Score Upgrade and Analyst Sentiment
Bandhan Bank's Mojo Score has improved to 51.0, resulting in an upgrade from a Sell to a Hold rating as of 4 February 2026. This shift reflects a more balanced outlook on the stock's prospects, factoring in its recent price resilience and improved technical indicators. The market cap grade remains modest at 3, consistent with its classification as a small-cap stock with a market capitalisation of ₹27,692.60 crore.
Despite the Hold rating, the stock's recent outperformance relative to its sector and the Sensex suggests that investors are cautiously optimistic. However, the mixed signals from delivery volumes and the price pullback warrant a measured approach, especially given the volatility often associated with small-cap banking stocks.
Sector and Broader Market Context
The private sector banking industry continues to face a challenging environment marked by regulatory scrutiny, asset quality concerns, and competitive pressures. Bandhan Bank's derivatives activity surge may be indicative of market participants positioning for upcoming earnings announcements, policy changes, or macroeconomic developments impacting credit growth and asset quality.
Comparatively, the stock's ability to maintain levels above all major moving averages is a positive technical signal, suggesting underlying strength relative to peers. However, the recent decline in delivery volumes could imply that long-term investors are adopting a wait-and-watch stance amid uncertain market conditions.
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Implications for Investors and Traders
For investors, the recent surge in open interest coupled with mixed price action suggests a period of consolidation and potential volatility ahead. The derivatives market activity may be driven by speculative traders or hedgers anticipating directional moves, but the lack of strong delivery volume participation signals caution.
Traders should monitor changes in open interest alongside price trends closely. A sustained increase in OI with rising prices would confirm bullish sentiment, while a rise in OI amid falling prices could indicate growing bearish bets. Given Bandhan Bank's current Hold rating and technical positioning, a balanced strategy incorporating risk management is advisable.
Furthermore, liquidity conditions remain supportive for executing trades of moderate size, which may encourage continued derivatives market engagement. However, investors should remain vigilant to broader sector developments and macroeconomic factors that could influence the stock's trajectory.
Conclusion
Bandhan Bank Ltd.'s recent open interest surge in derivatives highlights an active and evolving market landscape for this small-cap private sector bank. While technical indicators and improved Mojo Score suggest a cautiously optimistic outlook, the divergence in delivery volumes and price retracement underscore the need for prudence. Market participants should closely track derivatives positioning and volume patterns to gauge the prevailing sentiment and potential directional moves in the near term.
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