Hindustan Petroleum Sees Sharp Open Interest Surge Amidst Weak Price Momentum

Open Interest and Volume Dynamics

On 22 January 2026, Hindustan Petroleum’s open interest (OI) in futures and options contracts rose sharply to 41,296 from the previous 36,610 contracts, marking an increase of 4,686 contracts or 12.8%. This rise in OI occurred alongside a futures volume of 26,017 contracts, reflecting sustained trading interest. The futures value stood at approximately ₹90,410.25 lakhs, while the options segment exhibited a substantial notional value of ₹13,933.44 crores, culminating in a total derivatives value of ₹92,054.08 lakhs.

The underlying stock price closed at ₹420, down 1.78% on the day, underperforming its oil sector peers by 1.07% and the broader Sensex by 1.55%. Notably, the stock has been on a downward trajectory for five consecutive sessions, shedding 8.13% over this period. This persistent decline has seen HPCL trade below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — indicating a bearish technical setup.

Market Positioning and Investor Behaviour

The increase in open interest amid falling prices typically signals that fresh short positions are being established, or that existing shorts are being augmented. This is corroborated by the declining delivery volume, which dropped by 36.2% to 21.95 lakh shares on 22 January compared to the five-day average, suggesting reduced long-term investor participation. The combination of rising OI and falling prices often points to a build-up of bearish bets, as traders anticipate further downside or volatility in the near term.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹4.78 crores based on 2% of the five-day average. This ensures that institutional and high-volume traders can manoeuvre positions without significant market impact, potentially facilitating the observed OI expansion.

Technical and Fundamental Context

Hindustan Petroleum’s current Mojo Score stands at 64.0, reflecting a Hold rating, a downgrade from its previous Buy grade as of 22 January 2026. The downgrade reflects deteriorating technical momentum and cautious market sentiment. The company’s market capitalisation is ₹89,496.22 crores, placing it firmly in the mid-cap category within the oil sector.

Despite the recent price weakness, the stock offers a relatively attractive dividend yield of 3.62%, which may appeal to income-focused investors amid volatile market conditions. However, the technical indicators suggest that the bears currently hold sway, with the stock trading below all major moving averages and showing no immediate signs of reversal.

Derivatives Activity and Potential Directional Bets

The surge in open interest, particularly in futures contracts, indicates that traders are positioning for continued price movement. Given the stock’s five-day losing streak and underperformance relative to the sector and benchmark indices, it is plausible that market participants are increasing short exposure or employing put options to hedge existing long positions.

Options data, with a notional value exceeding ₹13,933 crores, suggests significant hedging or speculative activity. The elevated open interest in options could also imply that traders are anticipating heightened volatility, possibly due to upcoming corporate announcements, macroeconomic factors affecting the oil sector, or broader market uncertainties.

Investors should monitor the evolution of open interest alongside price action closely. A sustained increase in OI with falling prices typically confirms bearish sentiment, whereas a divergence—such as rising prices with increasing OI—could signal fresh bullish interest. Currently, the data points towards the former scenario.

Implications for Investors

For investors and traders, the current derivatives activity in Hindustan Petroleum signals caution. The rising open interest amid a downtrend suggests that market participants are either increasing bearish bets or hedging against further downside risk. This environment may not be conducive for initiating fresh long positions without clear signs of technical recovery or fundamental catalysts.

Long-term investors might find the stock’s dividend yield attractive, but should remain vigilant given the recent downgrade in Mojo Grade and the stock’s technical weakness. Monitoring delivery volumes and open interest trends will be crucial to gauge whether institutional investors are accumulating or exiting positions.

In the broader context, the oil sector continues to face headwinds from fluctuating crude prices, regulatory changes, and global economic uncertainties. Hindustan Petroleum’s performance and derivatives market activity should be analysed alongside these macro factors to form a comprehensive investment view.

Conclusion

The sharp increase in open interest for Hindustan Petroleum Corporation Ltd. amid a persistent price decline highlights a market environment dominated by bearish sentiment and active positioning in derivatives. While the stock’s fundamentals and dividend yield offer some support, technical indicators and market behaviour suggest caution. Investors should closely monitor evolving open interest, volume patterns, and sector dynamics before making directional bets on this mid-cap oil stock.

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