Cummins India Ltd Sees Surge in Call Option Activity Amid Bullish Momentum

Robust Call Option Activity Signals Investor Confidence

The call option with a strike price of ₹4,800 expiring on 24 February 2026 has witnessed exceptional trading volumes, with 17,696 contracts changing hands. This represents a significant turnover of ₹1555.12 lakhs, indicating substantial investor interest in leveraged bullish bets on Cummins India Ltd. The open interest stands at 1,317 contracts, suggesting that traders are maintaining their positions ahead of expiry, anticipating further upside in the underlying stock.

At the time of analysis, the underlying stock price was ₹4,745, just shy of the ₹4,800 strike, which is a psychologically important level. The concentration of call options at this strike price reveals a consensus expectation that the stock could breach this level in the near term, potentially triggering further gains for option holders.

Price Performance and Technical Strength

Cummins India Ltd. has been on a steady upward trajectory, outperforming its sector peers and broader benchmarks. The stock recorded a fresh 52-week high of ₹4,786.4 on 18 February 2026, marking a 4.1% intraday gain. Over the past three consecutive trading sessions, the stock has delivered a cumulative return of 7.36%, reflecting sustained buying interest.

Technically, the stock is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a strong bullish trend. This technical strength is further supported by rising delivery volumes, which surged by 27.84% to 2.81 lakh shares on 17 February, compared to the five-day average. Such rising investor participation often precedes significant price moves, reinforcing the positive outlook.

Sector-wise, the diesel engines segment has gained 2.4% on the day, with Cummins India Ltd. outperforming the sector by 0.35%. The Sensex remained largely flat, declining marginally by 0.02%, highlighting the stock’s relative strength amid broader market uncertainty.

Mojo Score and Rating Update

MarketsMOJO assigns Cummins India Ltd. a Mojo Score of 65.0, reflecting a moderate outlook. The company’s Mojo Grade was downgraded from Buy to Hold on 24 December 2025, signalling a more cautious stance despite recent price appreciation. The downgrade reflects a reassessment of valuation metrics and growth prospects amid evolving market conditions.

Despite the Hold rating, the stock’s large market capitalisation of ₹1,28,981 crores and liquidity profile make it a preferred choice for institutional investors seeking exposure to the compressors and diesel engines sector. The stock’s ability to sustain gains above key moving averages and maintain strong delivery volumes will be critical to its near-term trajectory.

Expiry Patterns and Implications for Traders

The expiry date of 24 February 2026 is attracting significant open interest, particularly at the ₹4,800 strike price. This clustering of call options suggests that traders are positioning for a breakout above this level before expiry. Should the stock close above ₹4,800, it could trigger a short squeeze and further buying in the options market, potentially amplifying the stock’s upward momentum.

Conversely, if the stock fails to breach this strike price, some profit-taking and unwinding of call positions may occur, leading to increased volatility. Traders should monitor open interest changes and volume patterns closely as expiry approaches to gauge market sentiment and adjust their strategies accordingly.

Sector Outlook and Comparative Performance

The compressors, pumps and diesel engines sector has shown resilience amid mixed macroeconomic signals. Cummins India Ltd.’s outperformance relative to its sector peers highlights its operational strength and market leadership. The company’s focus on innovation, product quality and expanding distribution networks continues to underpin investor confidence.

However, investors should remain mindful of potential headwinds such as raw material cost inflation, regulatory changes, and global supply chain disruptions that could impact margins and growth. The recent downgrade to Hold by MarketsMOJO reflects these considerations, urging a balanced approach to investment decisions.

Investor Takeaways and Strategic Considerations

For investors and traders, the current surge in call option activity on Cummins India Ltd. offers both opportunity and caution. The bullish positioning at the ₹4,800 strike price reflects confidence in the stock’s near-term upside potential, supported by strong technicals and sectoral tailwinds.

However, the downgrade to Hold and the stock’s valuation metrics suggest that upside may be tempered by profit-taking and market volatility. Investors should consider their risk tolerance and investment horizon carefully, balancing exposure to Cummins India Ltd. with diversification across other high-quality names in the compressors and diesel engines space.

Monitoring open interest trends, expiry dynamics, and delivery volumes will be essential for timely decision-making. Additionally, staying abreast of sector developments and macroeconomic factors will help investors navigate the evolving landscape effectively.

Conclusion

Cummins India Ltd.’s prominence in call option trading underscores its status as a key bellwether in the compressors, pumps and diesel engines sector. The stock’s recent price strength, combined with robust option market activity, signals a cautiously optimistic outlook among market participants. While the downgrade to Hold advises prudence, the company’s large-cap stature, liquidity, and technical momentum make it a compelling candidate for investors seeking exposure to industrial growth themes.

As expiry approaches on 24 February 2026, the market will closely watch whether Cummins India Ltd. can surpass the ₹4,800 strike price, potentially unlocking further gains. Until then, a balanced approach that weighs bullish enthusiasm against valuation and sector risks remains advisable.

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