Cholamandalam Investment Sees Sharp Open Interest Surge Amid Mixed Price Action

Open Interest and Volume Dynamics

On 18 February 2026, Cholamandalam’s open interest (OI) in futures and options contracts rose sharply from 34,399 to 38,803 contracts, an increase of 4,404 contracts or 12.8%. This expansion in OI was accompanied by a futures volume of 16,464 contracts, indicating robust trading activity. The futures value stood at approximately ₹1,05,024.5 lakhs, while the options segment exhibited an enormous notional value of ₹7,210.9 crores, underscoring the significant derivatives interest in the stock.

The underlying stock price closed at ₹1,698, having declined by 1.08% on the day, underperforming the NBFC sector’s 0.63% fall and the Sensex’s 0.85% drop. This divergence between rising open interest and a falling price suggests a nuanced market positioning, where participants may be hedging or speculating on volatility rather than directional conviction alone.

Price Trends and Moving Averages

Cholamandalam’s price action over recent sessions has been mixed. The stock has recorded a consecutive two-day decline, losing 1.92% cumulatively. However, it remains above its 20-day, 100-day, and 200-day moving averages, signalling underlying medium- to long-term strength. Conversely, it trades below its 5-day and 50-day moving averages, reflecting short-term weakness and potential consolidation.

Such a technical setup often attracts derivative traders who seek to capitalise on expected volatility or range-bound movements, which aligns with the observed surge in open interest despite the modest price decline.

Investor Participation and Liquidity

Investor participation has notably increased, with delivery volume on 18 February rising to 10.45 lakh shares, an 81.23% jump compared to the five-day average. This heightened delivery volume indicates stronger commitment from investors, possibly signalling accumulation at current levels despite short-term price softness.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transaction sizes up to ₹3.82 crores based on 2% of the five-day average traded value. This liquidity profile favours active derivatives trading and institutional participation.

Market Positioning and Directional Bets

The increase in open interest alongside a slight price decline suggests that traders are actively repositioning. The rise in OI could be attributed to fresh long positions being initiated by bulls anticipating a rebound or short sellers increasing exposure to hedge against further downside.

Given the stock’s current trading range—above key long-term moving averages but below short-term averages—market participants may be positioning for a potential breakout or breakdown. The substantial options notional value indicates that volatility strategies, such as straddles or strangles, might be popular, reflecting uncertainty about near-term direction.

Cholamandalam’s Mojo Score of 71.0 and an upgraded Mojo Grade from Hold to Buy as of 13 January 2026 further support a positive medium-term outlook. This upgrade reflects improved fundamentals and technicals, encouraging investors to consider accumulation despite recent price softness.

Sector and Market Context

Within the NBFC sector, Cholamandalam stands as a large-cap entity with a market capitalisation of ₹1,44,659.45 crores. The sector has faced headwinds recently due to tightening credit conditions and regulatory scrutiny, which have pressured valuations. However, Cholamandalam’s relative resilience and improving investor sentiment, as evidenced by rising delivery volumes and upgraded ratings, position it favourably against peers.

Comparatively, the stock’s underperformance relative to the sector (-0.46% differential) on the day may represent a short-term correction or profit-taking phase rather than a fundamental shift. The derivatives market activity suggests that sophisticated investors are actively managing risk and positioning for upcoming catalysts.

Implications for Investors

For investors, the surge in open interest combined with rising delivery volumes and an upgraded Mojo Grade signals a cautiously optimistic outlook. While short-term price weakness may persist, the underlying technical and fundamental indicators suggest potential for recovery and upside.

Investors should monitor the stock’s price action relative to its short-term moving averages and watch for changes in open interest and volume patterns in the derivatives market. A sustained increase in price accompanied by rising OI would confirm bullish conviction, whereas a decline in price with rising OI might indicate growing bearish bets or hedging activity.

Given the stock’s liquidity and active derivatives market, traders can consider strategies that balance risk and reward, such as protective puts or covered calls, to capitalise on expected volatility while managing downside risk.

Conclusion

Cholamandalam Investment & Finance Company Ltd’s recent open interest surge in derivatives highlights a dynamic market environment with active repositioning by traders. Despite a modest price decline and sector underperformance, the stock’s technical strength, improved investor participation, and upgraded Mojo Grade underpin a positive medium-term outlook. Market participants should closely watch derivatives activity and price trends to gauge the evolving directional bias and adjust strategies accordingly.

Only Rs. 9,999 - Get MojoOne for 1 Year + 3 Months FREE (60% Off) Start Today