Cholamandalam Investment Sees Sharp Open Interest Surge Signalling Renewed Market Interest

Open Interest and Volume Dynamics

The latest data reveals that open interest in Cholamandalam’s futures and options contracts rose from 33,499 to 37,053 contracts, an increase of 3,554 contracts or 10.61% on 23 Feb 2026. This uptick in OI is accompanied by a futures volume of 13,843 contracts, indicating robust trading activity. The futures value stands at approximately ₹75,898 lakhs, while the options segment commands a significantly larger notional value of ₹7,188 crores, culminating in a total derivatives value of ₹76,413 lakhs.

This surge in OI is particularly significant given the backdrop of a recent price recovery. After three consecutive days of decline, the stock reversed course, touching an intraday high of ₹1,706.8, up 2.23% on the day, outperforming its NBFC sector peers by 0.85% and delivering a 1.23% gain compared to the Sensex’s 0.38% rise. The underlying spot price currently trades at ₹1,688, reflecting a positive momentum shift.

Market Positioning and Directional Bets

The increase in open interest alongside rising volumes typically signals fresh positions being initiated rather than existing ones being squared off. In Cholamandalam’s case, the data suggests that market participants are building new directional bets, possibly anticipating further upside or a sustained trend reversal. The stock’s technical positioning supports this view, as it trades above its 20-day and 200-day moving averages, although it remains below the 5-day, 50-day, and 100-day averages, indicating a cautious but improving trend.

Interestingly, delivery volumes have fallen sharply by 50.04% compared to the five-day average, with only 3.52 lakh shares delivered on 20 Feb 2026. This decline in investor participation in the cash segment may imply that traders are increasingly favouring derivatives for leveraged exposure or hedging strategies rather than outright stock purchases.

Sector and Market Context

Cholamandalam operates within the Non Banking Financial Company (NBFC) sector, a space that has seen mixed performance amid tightening credit conditions and regulatory scrutiny. Despite these headwinds, Cholamandalam’s large-cap status with a market capitalisation of ₹1,43,952.55 crores and a recent upgrade in its Mojo Grade from Hold to Buy (Mojo Score 71.0 as of 13 Jan 2026) underscores its relative strength and investor confidence.

The stock’s ability to outperform the sector and broader market indices on the day of the OI surge suggests that investors are positioning for a potential recovery or sustained growth phase, possibly driven by improving asset quality, stable earnings outlook, or favourable macroeconomic factors.

Technical and Liquidity Considerations

From a technical perspective, Cholamandalam’s price action suggests a tentative trend reversal. The stock’s current position above the 20-day and 200-day moving averages is a positive sign, although it remains below shorter-term averages such as the 5-day and 50-day, indicating some resistance to overcome for a sustained rally.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value over five days supporting trade sizes up to ₹2.92 crores based on 2% of average volume. This liquidity profile is favourable for institutional investors and active traders seeking to capitalise on the evolving derivatives market activity.

Implications for Investors

The surge in open interest and volume in Cholamandalam’s derivatives contracts signals a shift in market sentiment and positioning. Investors should interpret this as a sign of increased conviction among traders, potentially reflecting expectations of further price appreciation or volatility ahead. However, the mixed technical signals and falling delivery volumes caution that the move may still be in its early stages and subject to market fluctuations.

Given the company’s recent upgrade to a Buy rating by MarketsMOJO and its strong market capitalisation, investors may consider monitoring the stock closely for confirmation of trend continuation. The derivatives market activity offers valuable insights into institutional and retail trader behaviour, which can be instrumental in timing entries or exits.

Outlook and Conclusion

Cholamandalam Investment & Finance Company Ltd’s recent open interest surge in derivatives is a clear indicator of shifting market dynamics and growing investor interest. The combination of rising OI, increased futures volume, and a price rebound after a short-term decline points to renewed optimism among traders and investors.

While the stock’s technical indicators suggest a cautious but improving trend, the sharp drop in delivery volumes highlights a preference for derivatives trading over outright stock accumulation. This could imply that market participants are positioning for volatility or leveraging their exposure amid uncertain macroeconomic conditions.

Investors should weigh these factors carefully, considering the company’s strong fundamentals, large-cap status, and recent upgrade to a Buy rating by MarketsMOJO. Monitoring open interest trends alongside price action and sector developments will be crucial to gauge the sustainability of this momentum and to make informed investment decisions.

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