Kalyan Jewellers Sees Sharp Open Interest Surge Amid Prolonged Downtrend

Open Interest Spike Signals Heightened Market Activity

On 22 January 2026, Kalyan Jewellers (symbol: KALYANKJIL) recorded an open interest (OI) of 79,038 contracts in its derivatives, marking a 14.53% increase from the previous day’s 69,009 contracts. This rise of 10,029 contracts is notable given the stock’s ongoing downtrend, indicating that traders are actively positioning themselves in the futures and options market despite—or perhaps because of—the bearish price action.

The total futures value stood at approximately ₹1,35,346.78 lakhs, while the options segment exhibited an extraordinarily high notional value of ₹70,707.48 crores, culminating in a combined derivatives market value of ₹1,47,860.94 lakhs. Such volumes underscore the stock’s liquidity and the intense speculative interest it commands among market participants.

Price Action and Volume Patterns Reflect Bearish Momentum

Kalyan Jewellers has been under pressure for the last ten consecutive trading sessions, shedding 27.8% in value during this period. On 22 January, the stock hit a fresh 52-week low of ₹373.25, down 5.88% intraday, and underperformed its sector by 3.2%. The weighted average price for the day skewed closer to the low, signalling selling dominance throughout the session.

Moreover, the stock is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—highlighting a sustained bearish trend. The delivery volume on 21 January surged to 80.16 lakh shares, a remarkable 268.26% increase over the five-day average, suggesting rising investor participation, possibly from short sellers or value hunters attempting to capitalise on the dip.

Market Positioning and Potential Directional Bets

The sharp increase in open interest amid falling prices typically indicates that fresh short positions are being established, or that existing shorts are being augmented. This is consistent with the stock’s Mojo Grade downgrade from Hold to Sell on 19 January 2026, reflecting deteriorating fundamentals and market sentiment. The current Mojo Score of 47.0 further reinforces the negative outlook.

However, the elevated volumes and open interest also suggest that some traders may be speculating on a potential reversal or volatility spike, using options strategies to hedge or profit from expected price swings. The large notional value in options points to active call and put writing, which could imply a market expectation of continued uncertainty or a trading range forming near current levels.

Sector and Market Context

Within the Gems, Jewellery and Watches sector, Kalyan Jewellers’ underperformance is stark compared to the sector’s 1-day return of -1.62% and the Sensex’s positive 0.48% gain on the same day. The company’s mid-cap market capitalisation of ₹38,709.36 crore places it among the larger players in the segment, yet its Market Cap Grade of 2 indicates moderate liquidity and trading interest relative to peers.

Given the sector’s sensitivity to discretionary spending and gold price fluctuations, the current market environment may be exacerbating investor caution. The stock’s inability to hold above key technical levels and the persistent selling pressure suggest that bearish sentiment could persist unless supported by positive fundamental developments.

Implications for Investors and Traders

For investors, the current scenario presents a cautionary tale. The downgrade to a Sell rating and the sustained price weakness suggest that the stock may face further downside pressure in the near term. The rising open interest and volume indicate that the market is pricing in continued volatility, and the risk-reward profile appears skewed towards the downside.

Traders, on the other hand, may find opportunities in the derivatives market to capitalise on this volatility. The surge in options activity and the large open interest build-up could facilitate strategies such as protective puts, short futures, or volatility plays. However, given the stock’s liquidity constraints—liquid enough for trade sizes up to ₹11.75 crore based on 2% of the five-day average traded value—position sizing and risk management remain critical.

Technical Outlook and Moving Averages

The stock’s position below all major moving averages signals a bearish technical setup. The 5-day and 20-day averages have acted as resistance in recent sessions, and the failure to reclaim these levels has reinforced selling pressure. The 50-day and longer-term averages trending downward further confirm the negative momentum.

Unless Kalyan Jewellers can break above these technical barriers with sustained volume, the downtrend is likely to continue. The recent 52-week low of ₹373.25 may act as a psychological support, but a breach could trigger accelerated selling and stop-loss triggers among traders.

Conclusion: Bearish Sentiment Dominates Amid Active Derivatives Positioning

Kalyan Jewellers India Ltd’s recent surge in open interest amid a prolonged price decline highlights a market grappling with uncertainty and bearish sentiment. The derivatives market activity suggests that traders are either reinforcing short positions or hedging against further downside, while the stock’s technical indicators remain weak.

Investors should remain cautious and monitor key support levels closely, as the risk of further declines persists. Meanwhile, the active options market offers tactical opportunities for sophisticated traders to navigate the volatility. Overall, the current market positioning and fundamental outlook favour a cautious stance on Kalyan Jewellers until signs of a sustainable turnaround emerge.

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