Hindustan Petroleum Sees Sharp Open Interest Surge Amid Bearish Price Action

Open Interest and Volume Dynamics

On 19 February 2026, Hindustan Petroleum's open interest (OI) in futures and options contracts rose sharply from 34,968 to 38,660 contracts, an absolute increase of 3,692 contracts or 10.56%. This surge in OI was accompanied by a volume of 30,986 contracts, indicating robust trading activity. The futures value stood at ₹85,682.20 lakhs, while the options segment exhibited an enormous notional value of approximately ₹18,695.94 crores, underscoring the significant interest in derivatives linked to the stock.

The combined derivatives value reached ₹87,792.54 lakhs, reflecting a substantial pool of capital deployed in HPCL's contracts. This heightened participation suggests that market participants are actively repositioning themselves, possibly in anticipation of near-term price movements or volatility shifts.

Price Performance and Technical Context

Despite the increased derivatives activity, Hindustan Petroleum's underlying share price has been under pressure. The stock closed at ₹429, down 0.78% on the day, underperforming the Oil sector by 1.35%, the Sensex by 0.42%, and the sector's 1-day return of 0.32%. Notably, the stock has declined for two consecutive sessions, losing 5.86% over this period.

Technically, HPCL is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish trend. This technical weakness contrasts with the rising open interest, suggesting that traders may be positioning for further downside or hedging existing long exposures.

Investor Participation and Liquidity

Investor engagement has intensified, with delivery volumes surging to 28.64 lakh shares on 19 February, a 235.6% increase over the 5-day average delivery volume. This spike in delivery volume indicates that more investors are holding shares rather than trading intraday, which could reflect accumulation or distribution phases.

Liquidity remains adequate for sizeable trades, with the stock supporting a trade size of approximately ₹1.96 crore based on 2% of the 5-day average traded value. This liquidity profile facilitates active participation by institutional and retail investors alike.

Market Positioning and Directional Bets

The simultaneous rise in open interest and declining price suggests that traders are increasingly taking short positions or hedging long holdings. The 10.56% increase in OI, coupled with falling prices, is often interpreted as a bearish signal, indicating that fresh short positions are being added rather than longs unwinding.

Given the stock's current trading below all major moving averages and the recent two-day fall of nearly 6%, market participants appear cautious about near-term prospects. The elevated derivatives activity could also reflect speculative bets on volatility or hedging strategies by institutional investors amid uncertain oil sector dynamics.

Fundamental and Sectoral Context

Hindustan Petroleum Corporation Ltd. operates within the Oil industry and is classified as a mid-cap company with a market capitalisation of approximately ₹91,411.26 crore. The company currently offers a dividend yield of 3.57%, which remains attractive in the context of its sector peers.

However, the stock's recent underperformance relative to the Oil sector and the broader Sensex highlights sector-specific headwinds or company-specific concerns that may be weighing on investor sentiment. The Mojo Score of 74.0 and an upgraded Mojo Grade from Hold to Buy as of 9 February 2026 reflect a positive medium-term outlook, but the immediate price action suggests caution.

Implications for Investors

For investors, the surge in open interest alongside falling prices signals a need for careful analysis. The derivatives market is signalling increased bearish positioning, which could translate into further downside risk in the short term. However, the upgraded Mojo Grade and solid dividend yield provide a counterbalance, suggesting that the stock may offer value for long-term investors willing to weather near-term volatility.

Traders should monitor changes in open interest and volume patterns closely, as any reversal or sustained increase in price accompanied by rising OI could indicate a shift in market sentiment. Additionally, the stock’s liquidity profile supports active trading strategies, but risk management remains paramount given the current technical weakness.

Conclusion

The recent surge in open interest for Hindustan Petroleum Corporation Ltd. highlights a significant shift in market positioning amid a bearish price environment. While the derivatives market activity points to increased short interest or hedging, the company’s fundamental strengths and upgraded Mojo Grade suggest potential for recovery over the medium term.

Investors should remain vigilant to evolving volume and price trends, balancing the technical signals with the company’s dividend yield and sector outlook. The current environment favours a cautious approach, with an eye on potential volatility and directional shifts in the oil sector.

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