Hindustan Petroleum Sees Sharp Open Interest Surge Amid Bearish Price Action

Open Interest and Volume Dynamics

On 25 Feb 2026, Hindustan Petroleum’s open interest (OI) rose sharply from 23,498 contracts to 27,612 contracts, an increase of 4,114 contracts or 17.51%. This notable spike in OI was accompanied by a volume of 21,373 contracts, indicating active participation in the derivatives market. The futures value stood at ₹56,678.5 lakhs, while the options value was substantially higher at ₹13,953.25 crores, culminating in a total derivatives value of ₹60,218.5 lakhs. Such elevated derivatives activity reflects increased hedging or speculative interest in the stock.

The underlying stock price closed near its intraday low of ₹432.45, down 3.27% on the day, underperforming its oil sector peers by approximately 2% and the broader Sensex by 0.36%. The weighted average price of traded contracts clustered near the day’s low, signalling selling pressure and bearish sentiment among participants. Furthermore, the stock traded below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – reinforcing a downtrend bias.

Market Positioning and Directional Bets

The surge in open interest amid falling prices typically indicates that fresh short positions are being initiated or that existing shorts are being added to, rather than long liquidation. This suggests that traders are positioning for further downside or volatility in Hindustan Petroleum’s shares. The rising delivery volume of 18.03 lakh shares on 24 Feb, which was 21.34% higher than the 5-day average, also points to increased investor participation, possibly reflecting institutional repositioning or profit booking.

Given the stock’s current valuation and market cap of ₹92,102.8 crores, it remains a mid-cap entity within the oil sector, with a respectable dividend yield of 3.46%. However, the technical deterioration and increased open interest hint at cautious sentiment prevailing in the near term. The Mojo Score of 74.0, upgraded from a previous Hold to a Buy rating on 9 Feb 2026, indicates underlying fundamental strength, but the immediate price action and derivatives data suggest that market participants are bracing for potential volatility or correction.

Technical and Fundamental Context

Hindustan Petroleum’s current trading below all major moving averages signals a bearish technical setup. The 5-day average price is above the current level, indicating short-term weakness, while the 200-day moving average, a long-term trend indicator, also remains out of reach. This technical backdrop, combined with the spike in open interest, suggests that traders are either hedging against further declines or speculating on a downward move.

Despite this, the company’s fundamentals remain relatively robust. The Mojo Grade upgrade to Buy with a score of 74.0 reflects improved financial metrics and positive outlooks from MarketsMOJO’s proprietary analysis. The market cap grade of 2 indicates a mid-cap classification, which often entails higher volatility but also growth potential compared to large-cap peers. Investors should weigh these fundamentals against the current technical signals and derivatives market positioning.

Sector and Market Comparison

On the day of analysis, Hindustan Petroleum’s 1-day return was -3.18%, underperforming the oil sector’s -0.95% and the Sensex’s modest 0.18% gain. This relative weakness within the sector highlights stock-specific pressures, possibly linked to profit booking or concerns over near-term earnings or macroeconomic factors affecting oil prices. The derivatives market’s increased activity may be a reflection of these sectoral headwinds, with traders seeking to capitalise on expected volatility.

Implications for Investors and Traders

For investors, the current scenario suggests caution. While the fundamental upgrade signals long-term potential, the technical weakness and rising open interest in a falling market price point to possible short-term downside or consolidation. Traders might consider strategies that benefit from volatility or downside moves, such as buying puts or initiating short futures positions, while investors may prefer to wait for clearer signs of trend reversal or fundamental confirmation.

Liquidity remains adequate, with the stock’s traded value supporting trade sizes up to ₹3.21 crores based on 2% of the 5-day average traded value. This ensures that both institutional and retail participants can execute sizeable trades without significant market impact.

Outlook and Conclusion

Hindustan Petroleum’s derivatives market activity on 25 Feb 2026 reveals a complex interplay of bearish technical signals and underlying fundamental strength. The sharp rise in open interest amid falling prices suggests that market participants are positioning for further downside or volatility in the near term. However, the company’s upgraded Mojo Grade and solid dividend yield provide a counterbalance, indicating potential value for longer-term investors.

Market participants should closely monitor subsequent price action, open interest trends, and sector developments to gauge the sustainability of current moves. A break above key moving averages or a reduction in open interest on price recovery could signal a shift in sentiment. Conversely, continued accumulation of short positions and price weakness may confirm a bearish phase.

In summary, while Hindustan Petroleum remains fundamentally sound with a positive outlook from MarketsMOJO, the immediate derivatives market signals and price action counsel prudence and active risk management for traders and investors alike.

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