Polycab India Sees Sharp Open Interest Surge Amid Bearish Price Action

Open Interest and Volume Dynamics

The latest data reveals that Polycab’s open interest (OI) increased by 7,220 contracts from the previous 60,388, marking an 11.96% rise. This expansion in OI accompanied a daily traded volume of 66,836 contracts, indicating robust participation in the derivatives market. The futures value stood at ₹1,46,168.5 lakhs, while the options segment exhibited a substantial notional value of ₹44,144.86 crores, culminating in a combined derivatives value of approximately ₹1,49,615.95 lakhs. Such figures underscore heightened speculative or hedging activity around Polycab’s stock.

Interestingly, the underlying stock price closed at ₹6,752, having touched an intraday low of ₹6,725, down 3.91% from the previous close. The weighted average price of traded contracts clustered near this low, suggesting that the bulk of trading activity occurred at depressed price levels. This pattern often reflects bearish sentiment or profit-taking by short-term traders.

Market Positioning and Directional Bets

The simultaneous rise in open interest and decline in price typically indicates that new short positions are being established or that longs are liquidating, both of which can signal bearish market positioning. Given Polycab’s OI increase alongside a 3.74% price drop, it is plausible that traders are betting on further downside or volatility in the near term.

Further supporting this view is the stock’s underperformance relative to its sector and benchmark indices. Polycab lagged the cables-electricals sector by 2.58% and the Sensex by 2.83% on the day, reflecting broader market pressures or company-specific concerns. The stock is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend and weak technical momentum.

Delivery volumes also paint a cautious picture. On 22 Jan 2026, the delivery volume was 2.03 lakh shares, which is down sharply by 69.37% compared to the five-day average delivery volume. This decline in investor participation at the delivery level suggests that long-term holders may be stepping back, leaving room for increased speculative activity in the derivatives market.

Technical and Fundamental Context

Polycab India Ltd, a mid-cap player in the cables-electricals industry with a market capitalisation of ₹1,01,438.65 crores, currently holds a Mojo Score of 72.0 and a Mojo Grade of Buy, upgraded from Hold on 21 Jul 2025. Despite the recent price weakness, this rating reflects the company’s solid fundamentals and growth prospects within its sector.

However, the current technical setup is challenging. The stock’s failure to hold above its short- and long-term moving averages indicates bearish momentum. The decline in delivery volumes further suggests weakening conviction among long-term investors. These factors combined with the surge in derivatives open interest imply that traders are positioning for potential downside or increased volatility in the near term.

Liquidity and Trading Considerations

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting trade sizes up to ₹11.29 crores based on 2% of the five-day average traded value. This ensures that institutional and retail participants can execute orders without significant market impact, which may encourage active derivatives trading and speculative positioning.

Given the stock’s underperformance relative to the sector and benchmark indices, combined with the derivatives market activity, investors should closely monitor open interest trends and volume patterns for clues on future price direction. A sustained increase in OI with falling prices often precedes further declines or heightened volatility, while a reversal in these metrics could signal a change in trend.

Implications for Investors and Traders

For investors, the current scenario suggests caution. While Polycab’s fundamental outlook remains positive as reflected in its Buy rating and Mojo Score, the technical weakness and derivatives market positioning indicate near-term risks. Investors should consider monitoring key support levels around ₹6,700 and watch for any signs of reversal in open interest and volume trends before increasing exposure.

Traders, particularly those active in the derivatives segment, may find opportunities in the increased volatility and directional bets. The rise in open interest alongside falling prices often signals fresh short positions or protective hedging strategies. Close attention to option chain data, strike price concentrations, and expiry dynamics will be crucial to gauge market sentiment and potential price moves.

Sector and Market Context

The cables-electricals sector has experienced mixed performance recently, with Polycab’s 1-day return of -3.73% underperforming the sector’s -1.65% and the Sensex’s -0.91%. This relative weakness may be attributable to sector-specific challenges such as raw material cost pressures, demand fluctuations, or broader market volatility. Polycab’s derivatives activity could be reflecting these macro and micro factors, as traders adjust their positions accordingly.

Overall, the surge in open interest combined with price weakness and declining delivery volumes paints a complex picture of market sentiment around Polycab India Ltd. While fundamentals remain intact, technical signals and derivatives positioning suggest a cautious stance in the short term.

Conclusion

Polycab India Ltd’s recent open interest surge in derivatives, rising nearly 12% to 67,608 contracts, amid a 3.74% price decline, highlights increased market activity and bearish positioning. The stock’s underperformance relative to sector and benchmark indices, coupled with weak technical indicators and falling delivery volumes, suggests that traders are positioning for potential downside or volatility. Investors should weigh these factors carefully, balancing Polycab’s strong fundamentals against near-term technical risks, while traders may find opportunities in the evolving derivatives landscape.

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