Larsen & Toubro Gains 5.03%: 5 Key Factors Driving the Weekly Rally

27 January: Open Interest Surges Amid Mixed Technical Signals

Larsen & Toubro began the week with a notable 1.20% gain to close at Rs.3,790.00, outperforming the Sensex’s 0.50% rise. This price move coincided with an 11.9% surge in open interest in the derivatives segment, reflecting heightened market activity and evolving investor positioning. Futures volume was robust at 88,814 contracts, with a combined futures and options value of approximately ₹27,429.8 crores, underscoring strong liquidity.

Despite the positive price action, the stock remained below its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short- to medium-term resistance. Delivery volumes increased by 18.91% over the five-day average, indicating genuine accumulation rather than speculative trading. The mixed technical signals and a recent downgrade to Hold suggested cautious optimism among traders, with some hedging or profit-taking evident.

28 January: Continued Open Interest Growth and Strong Quarterly Results

The stock edged up marginally by 0.10% to Rs.3,793.65, underperforming the Capital Goods sector’s 2.65% gain but still maintaining strength above the 200-day moving average. Open interest rose by 11.5%, with futures volume at 57,004 contracts and a combined futures and options notional value exceeding ₹32,255 crores, highlighting sustained derivatives market interest.

Crucially, L&T reported a strong Q3 FY26 financial turnaround, with Profit Before Tax (excluding other income) surging 31.0% year-on-year to ₹5,719.94 crores and Profit After Tax rising 22.1% to ₹4,099.65 crores. Operational efficiency improved, with ROCE peaking at 14.84% and a reduced Debt-Equity ratio of 1.32 times. Despite a relatively low EPS of ₹23.37, the overall financial trend shifted positively, supporting the recent Mojo Grade upgrade to Buy with a score of 71.0.

29 January: Intraday High and Robust Trading Activity

Larsen & Toubro demonstrated strong intraday momentum on 29 January, surging 3.36% to close at Rs.3,932.45 and touching an intraday high of Rs.3,935.10. This outperformance contrasted with the Sensex’s 0.44% decline, highlighting L&T’s resilience amid a subdued market. The stock opened with a 2.21% gap up and exhibited elevated intraday volatility of 131.1%, reflecting active trading interest.

Trading volumes were substantial, with over 11 lakh shares exchanged, translating into a traded value of ₹43,092.7 lakhs. Delivery volumes rose 5.15% to 13.94 lakh shares, signalling strong institutional participation. Technically, the stock traded above its 5-day, 100-day, and 200-day moving averages but remained below the 20-day and 50-day averages, indicating some near-term resistance.

The stock’s Mojo Grade upgrade to Buy and a score of 71.0 aligned with this positive price action and volume trend, reinforcing confidence in L&T’s medium-term prospects.

29 January: Surge in Call and Put Option Activity Ahead of February Expiry

Options market activity intensified on 29 January, with Larsen & Toubro seeing a notable surge in both call and put option volumes ahead of the 24 February 2026 expiry. Call options at strike prices of ₹3,900, ₹4,000, and ₹4,100 attracted significant interest, with the ₹3,900 strike recording over 10,000 contracts traded and open interest peaking at 4,658 contracts for the ₹4,000 strike. This bullish positioning suggests investor optimism for potential upside moves.

Conversely, put options also saw heavy activity, particularly at strikes of ₹3,600 to ₹3,900, indicating increased hedging or bearish bets. The most active put option was at ₹3,800, with 3,647 contracts traded and open interest of 3,236 contracts. This dual surge in call and put options reflects a nuanced market sentiment balancing optimism with caution amid ongoing volatility.

The underlying stock price of Rs.3,886 on 29 January, combined with rising delivery volumes and strong liquidity, supports the view of active institutional participation and strategic positioning ahead of expiry.

30 January: Week Closes with Modest Gain Amid Mixed Market

On the final trading day of the week, 30 January, Larsen & Toubro closed marginally higher by 0.03% at Rs.3,933.45, maintaining the week’s overall gain of 5.03%. The Sensex declined 0.22% to 36,185.03, underscoring L&T’s outperformance. Trading volumes were lower at 78,386 shares, reflecting typical end-of-week consolidation.

The stock’s ability to hold near its intraday highs despite broader market weakness highlights sustained investor confidence. Technical indicators remain mixed, with the stock above its 5-day and 200-day moving averages but facing resistance at intermediate levels. The week’s events, including strong quarterly results, active derivatives markets, and institutional interest, collectively underpin the stock’s positive momentum.

Key Takeaways

Positive Signals: L&T’s 5.03% weekly gain significantly outpaced the Sensex’s 1.62%, supported by strong quarterly earnings, rising delivery volumes, and a Mojo Grade upgrade to Buy. The stock’s ability to trade above its 5-day and 200-day moving averages indicates solid short- and long-term technical support. Robust derivatives market activity, including surges in open interest and call option volumes, reflects growing investor confidence and anticipation of further upside.

Cautionary Notes: Despite positive momentum, the stock faces resistance near its 20-day and 50-day moving averages, suggesting potential consolidation or short-term hurdles. Heavy put option activity near current price levels signals hedging and cautious sentiment among some investors. The relatively low EPS in the latest quarter and sectoral challenges such as raw material price volatility and regulatory uncertainties warrant close monitoring.

Conclusion

Larsen & Toubro Ltd. demonstrated a strong and resilient performance during the week ending 30 January 2026, driven by a combination of robust financial results, active institutional participation, and dynamic derivatives market positioning. The stock’s 5.03% gain, outpacing the Sensex by nearly 3.5 percentage points, underscores its leadership within the construction sector amid a mixed market environment.

While technical resistance and put option activity suggest some caution, the overall fundamentals and positive momentum support a constructive outlook. Investors and traders should continue to monitor price action around key moving averages and expiry-related derivatives activity to gauge the sustainability of the current trend. L&T’s large-cap stature, improving financial health, and strategic positioning make it a focal point for market participants navigating India’s infrastructure growth story.

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