Polycab India Sees Significant Open Interest Surge Amid Bearish Price Action

Open Interest and Volume Dynamics

On 23 Jan 2026, Polycab India Ltd’s open interest (OI) in derivatives rose sharply to 66,647 contracts from 60,388 the previous day, marking an increase of 6,259 contracts or 10.36%. This expansion in OI is significant given the stock’s volume of 47,864 contracts traded on the same day. The futures segment alone accounted for a value of approximately ₹1,14,180.24 lakhs, while options contributed an overwhelming ₹30,993.26 crores, culminating in a total derivatives value of ₹1,16,645.08 lakhs. The underlying stock price stood at ₹6,821.

Such a rise in open interest alongside substantial volume typically indicates fresh positions being established rather than existing ones being squared off. This suggests that market participants are actively repositioning themselves, possibly anticipating a directional move in the stock.

Price Performance and Moving Averages

Despite the surge in derivatives activity, Polycab India’s stock price underperformed on the day, declining by 2.35% compared to a sector fall of 1.05% and a marginal Sensex drop of 0.23%. The stock touched an intraday low of ₹6,811, down 2.69% from the previous close. Notably, Polycab is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish technical setup and weakening short- to long-term momentum.

Investor participation appears to be waning, with delivery volumes on 22 Jan falling sharply by 69.37% to 2.03 lakh shares compared to the 5-day average. This decline in delivery volume suggests that long-term holders may be reducing exposure or adopting a wait-and-watch stance amid the recent volatility.

Market Capitalisation and Quality Metrics

Polycab India Ltd is classified as a mid-cap stock with a market capitalisation of ₹1,02,891.43 crores. The company operates within the Cables - Electricals industry and sector, which has been subject to mixed performance amid fluctuating demand and raw material cost pressures.

MarketsMOJO assigns Polycab a Mojo Score of 72.0, reflecting a positive outlook, and recently upgraded its Mojo Grade from Hold to Buy on 21 Jul 2025. This upgrade indicates improving fundamentals and technicals, although the current price action and open interest surge suggest that traders are positioning cautiously amid near-term uncertainties.

Interpreting the Open Interest Surge

The 10.36% increase in open interest, in conjunction with a volume of 47,864 contracts, points to fresh speculative or hedging activity. Given the stock’s price decline and underperformance relative to the sector and Sensex, it is plausible that traders are initiating bearish positions, possibly through futures shorting or put option buying.

However, the substantial options value of over ₹30,993 crores indicates significant interest in both calls and puts, which could also reflect hedging strategies or volatility plays. The elevated open interest may be a precursor to increased volatility as market participants adjust their positions ahead of upcoming corporate announcements, macroeconomic data, or sectoral developments.

Liquidity and Trading Considerations

Polycab’s liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting a trade size of approximately ₹11.29 crores based on 2% of the 5-day average traded value. This liquidity ensures that institutional and retail investors can enter or exit positions without excessive slippage, which is crucial during periods of heightened derivatives activity.

Sector and Broader Market Context

The Cables - Electricals sector has faced headwinds recently due to raw material cost inflation and subdued demand from key end-user industries. Polycab’s underperformance relative to its sector (-1.25% difference in daily returns) suggests company-specific factors may also be influencing sentiment.

Nonetheless, the upgrade to a Buy rating by MarketsMOJO and a Mojo Score of 72.0 reflect confidence in the company’s medium-term prospects, supported by robust fundamentals and improving operational metrics. Investors should weigh these positives against the current technical weakness and increased derivatives positioning.

Potential Directional Bets and Market Positioning

The combination of rising open interest and falling prices often signals that traders are building short positions or buying protective puts, anticipating further downside. Alternatively, some participants may be establishing call positions at lower premiums, expecting a rebound from oversold levels.

Given Polycab’s trading below all major moving averages, the technical outlook remains bearish in the short term. However, the recent upgrade in Mojo Grade from Hold to Buy suggests that medium-term fundamentals are improving, which could attract value investors once volatility subsides.

Market participants should monitor open interest trends closely in the coming sessions. A sustained increase in OI accompanied by price declines would confirm bearish sentiment, while a drop in OI with price stabilisation could indicate profit-taking or position unwinding.

Conclusion

Polycab India Ltd’s derivatives market activity reveals a complex interplay of factors. The 10.36% surge in open interest amid a 2.35% price decline and weakening technical indicators points to cautious bearish positioning by traders. Despite this, the company’s upgraded Mojo Grade and solid fundamentals provide a counterbalance, suggesting potential for recovery in the medium term.

Investors should remain vigilant of evolving open interest and volume patterns, as these will offer critical clues on market sentiment and directional bets. Given the stock’s liquidity and market cap, Polycab remains a key mid-cap to watch within the Cables - Electricals sector.

Overall, the current market positioning reflects a nuanced outlook, with traders hedging risks while awaiting clearer signals on the stock’s next directional move.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →