Polycab India Ltd Sees Sharp Open Interest Surge Signalling Bullish Market Positioning

Open Interest and Volume Dynamics

The latest data reveals that Polycab’s open interest (OI) in futures and options contracts rose sharply from 38,046 to 47,016, an increase of 8,970 contracts or 23.58%. This surge in OI is accompanied by a robust volume of 35,775 contracts traded, indicating active participation from both institutional and retail investors. The futures value stands at approximately ₹1,50,887 lakhs, while the options segment commands an overwhelming ₹19,967.78 crores in notional value, underscoring the stock’s prominence in the derivatives market.

Such a marked increase in OI, coupled with sustained volume, often signals fresh capital inflows and new positions being established rather than mere unwinding of existing trades. This suggests that market participants are positioning themselves for a potential upward move in Polycab’s share price, reflecting confidence in the company’s near-term prospects.

Price Performance and Technical Strength

Polycab’s underlying equity price closed at ₹7,896, just 0.91% shy of its 52-week high of ₹7,948, demonstrating strong price momentum. The stock has outperformed its sector by 2.08% on the day and has recorded a 3.8% gain over the past four consecutive trading sessions. Notably, Polycab is trading above all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating a sustained bullish trend and technical strength.

Investor participation has also risen significantly, with delivery volumes on 18 Feb reaching 1.05 lakh shares, a 45.23% increase over the five-day average. This heightened delivery volume confirms genuine buying interest rather than speculative intraday activity, reinforcing the positive outlook.

Market Capitalisation and Liquidity Considerations

As a large-cap stock with a market capitalisation of ₹1,18,407.12 crores, Polycab offers ample liquidity for sizeable trades. The stock’s liquidity supports trade sizes up to ₹2.15 crores based on 2% of the five-day average traded value, making it attractive for institutional investors and high-net-worth individuals seeking exposure to the cables and electricals sector.

Despite a minor day change of -0.14%, the overall trend remains positive, with the stock outperforming the Sensex, which declined by 1.12%, and the sector index, which fell 1.60% on the same day. This relative strength amidst broader market weakness further highlights Polycab’s resilience and investor preference.

Interpreting the Open Interest Surge: Directional Bets and Market Positioning

The 23.58% jump in open interest is a clear indication that traders are establishing new positions rather than closing out existing ones. Given the concurrent price appreciation and rising volumes, it is reasonable to infer that the majority of these positions are bullish in nature. Market participants appear to be betting on further upside potential in Polycab’s shares, possibly driven by strong earnings expectations, favourable industry dynamics, or positive macroeconomic factors supporting infrastructure and electrical demand.

Moreover, the substantial notional value in options contracts suggests that investors are employing a variety of strategies, including call buying and bullish spreads, to capitalise on anticipated price gains while managing risk. The elevated futures value also points to increased hedging activity, possibly by institutional players seeking to lock in gains or accumulate positions tactically.

Sectoral Context and Peer Comparison

Within the cables and electricals sector, Polycab’s performance stands out. While the sector index declined by 1.60% on the day, Polycab’s outperformance by over 2% highlights its relative strength. This divergence may be attributed to the company’s robust fundamentals, market leadership, and strategic initiatives that have enhanced investor confidence.

Its Mojo Score of 71.0 and an upgraded Mojo Grade from Hold to Buy as of 21 Jul 2025 further validate the positive sentiment. The company’s Market Cap Grade of 1 underscores its large-cap status and the stability that comes with it, making it a preferred choice for risk-averse investors seeking growth within the sector.

Implications for Investors and Traders

For investors, the surge in open interest combined with strong price action and rising delivery volumes suggests a favourable entry point in Polycab India Ltd. The stock’s technical indicators and fundamental upgrades support a bullish outlook, making it a compelling candidate for portfolio inclusion within the electrical cables sector.

Traders may view the increased derivatives activity as an opportunity to capitalise on short-term momentum. The elevated liquidity and active options market provide ample scope for deploying various strategies, including directional bets and hedging techniques. However, given the stock’s proximity to its 52-week high, prudent risk management remains essential to navigate potential volatility.

Overall, the data points to a well-supported uptrend underpinned by strong market positioning and investor conviction, signalling that Polycab India Ltd is poised for continued gains in the near term.

Outlook and Conclusion

Polycab India Ltd’s recent open interest surge in derivatives markets is a clear barometer of growing bullish sentiment. Supported by solid fundamentals, technical strength, and increased investor participation, the stock is demonstrating resilience and leadership within its sector. The upgrade to a Buy rating and a Mojo Score of 71.0 further reinforce the positive outlook.

While broader market indices have shown weakness, Polycab’s relative outperformance and sustained momentum suggest it remains a preferred large-cap pick for investors seeking exposure to the cables and electricals industry. Continued monitoring of open interest trends, volume patterns, and price action will be crucial to gauge the sustainability of this rally.

In summary, the combination of rising open interest, strong volume, and technical indicators points to a constructive market positioning for Polycab India Ltd, making it an attractive proposition for both long-term investors and active traders.

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