Open Interest and Volume Dynamics
On 23 Feb 2026, M&M’s open interest in futures and options contracts rose sharply to 1,82,276 contracts from the previous day’s 1,63,865, marking an 11.24% increase. This substantial rise in OI, coupled with a daily volume of 1,06,512 contracts, indicates a strong influx of fresh positions rather than mere unwinding of existing ones. The futures value stood at ₹2,86,683.74 lakhs, while the options segment exhibited an enormous notional value of ₹46,283.20 crores, underscoring the stock’s active participation in the derivatives market.
The underlying stock price closed at ₹3,447, registering a 1.16% gain on the day, outperforming the automobile sector’s 0.75% rise and the broader Sensex’s 0.44% advance. This outperformance, after two consecutive days of decline, suggests a potential trend reversal supported by increased investor participation.
Market Positioning and Investor Sentiment
The surge in open interest alongside rising volumes often signals that market participants are taking fresh directional bets. In M&M’s case, the increase in OI by over 18,400 contracts suggests that traders are positioning for a sustained upward move. This is further corroborated by the stock’s delivery volume of 14.81 lakh shares on 20 Feb, which was 28.74% higher than the five-day average, indicating strong investor conviction in the underlying equity.
Technically, M&M’s price remains above its 200-day moving average, a long-term bullish indicator, although it trades below its 5-day, 20-day, 50-day, and 100-day moving averages. This mixed technical picture points to a stock in consolidation, with the recent OI spike potentially marking the beginning of a breakout phase.
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Implications of the Open Interest Surge
The 11.24% increase in open interest is significant for a large-cap stock like M&M, which boasts a market capitalisation of ₹4,29,303.46 crores. Such a rise often reflects growing confidence among institutional and retail traders about the stock’s near-term prospects. The elevated futures and options activity suggests that participants are hedging or speculating on expected volatility or directional moves.
Given the stock’s recent outperformance relative to its sector and the Sensex, the open interest spike may be driven by bullish bets anticipating a recovery in the automobile sector, which has been navigating cyclical headwinds. The delivery volume spike further confirms that investors are not merely trading on momentum but are willing to hold positions, signalling a fundamental underpinning to the price action.
Technical and Fundamental Outlook
Mahindra & Mahindra’s Mojo Score currently stands at 77.0, upgraded from a previous Hold to a Buy rating on 6 Feb 2026. This upgrade reflects improved fundamentals, valuation metrics, and technical strength. The company’s market cap grade is 1, indicating its status as a large-cap stock with robust liquidity and institutional interest.
While the stock trades below its short- and medium-term moving averages, the sustained rise above the 200-day moving average provides a solid base for potential upside. The combination of rising open interest, increased delivery volumes, and positive price action suggests that M&M could be poised for a sustained rally, provided sectoral conditions remain favourable.
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Sectoral Context and Broader Market Trends
The automobile sector has been under pressure due to supply chain disruptions and fluctuating demand patterns. However, recent policy support and easing of semiconductor shortages have improved outlooks for key players like M&M. The stock’s outperformance relative to the sector’s 0.75% gain on the day highlights its relative strength and investor preference.
Moreover, the Sensex’s modest 0.44% rise on the same day underscores that M&M’s gains are not merely a reflection of broader market moves but are driven by stock-specific factors, including the surge in derivatives activity and positive technical signals.
Investor Takeaways and Strategic Considerations
For investors and traders, the sharp increase in open interest and volume in M&M’s derivatives suggests an opportunity to capitalise on potential upward momentum. The stock’s liquidity, with a trade size capacity of approximately ₹14.27 crores based on 2% of the five-day average traded value, supports sizeable positions without significant market impact.
However, caution is warranted given the stock’s position below several short-term moving averages, which may act as resistance levels. Monitoring open interest trends alongside price action will be crucial to confirm the sustainability of the current bullish sentiment.
Overall, the combination of fundamental upgrades, improved investor participation, and technical momentum positions Mahindra & Mahindra Ltd as a compelling large-cap automobile stock to watch in the near term.
Conclusion
The recent surge in open interest and volume in Mahindra & Mahindra Ltd’s derivatives market signals a renewed bullish stance among investors. Supported by a Mojo Grade upgrade to Buy and strong delivery volumes, the stock has demonstrated resilience and potential for further gains. While short-term technical hurdles remain, the underlying fundamentals and market positioning suggest that M&M is well placed to benefit from a sectoral recovery and sustained investor interest.
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