Polycab India Sees Significant Open Interest Surge Signalling Bullish Market Positioning

Open Interest and Volume Dynamics

The latest data reveals that Polycab’s open interest in futures and options has expanded by 5,170 contracts, marking a substantial 13.45% increase. This growth in OI is accompanied by a futures volume of 27,904 contracts, indicating heightened trading activity and fresh positions being established rather than merely unwound. The combined futures and options value stands at approximately ₹1,12,505 lakhs, with futures contributing ₹1,11,393 lakhs and options an overwhelming ₹15,975 crores in notional value, underscoring the stock’s liquidity and active participation in the derivatives market.

Such a surge in open interest, especially when paired with rising volumes, often signals that traders are taking new directional bets rather than closing existing positions. In Polycab’s case, this is further supported by the underlying stock price trading at ₹7,812, just 1.75% shy of its 52-week high of ₹7,948, suggesting confidence in continued upward momentum.

Market Positioning and Technical Indicators

Polycab India Ltd is currently outperforming its own recent moving averages, trading above its 5-day, 20-day, 50-day, 100-day, and 200-day averages. This consistent upward trend across multiple timeframes reflects strong technical support and investor conviction. Despite underperforming its sector by 0.75% on the day, the stock’s 1-day return of 0.20% remains positive, especially when compared to the Sensex’s 0.61% gain and the sector’s 1.14% rise.

Investor participation has notably increased, with delivery volumes on 19 February reaching 1.34 lakh shares, a 66.72% rise over the 5-day average delivery volume. This surge in delivery volume indicates genuine accumulation by long-term investors rather than speculative trading, reinforcing the bullish narrative.

Fundamental and Market Cap Insights

Polycab India Ltd, a large-cap company with a market capitalisation of ₹1,17,330.69 crores, operates in the cables and electricals sector, which has shown resilience amid fluctuating commodity prices and infrastructure demand. The company’s Mojo Score has improved to 78.0, earning it a Buy grade as of 21 July 2025, upgraded from a previous Hold rating. This upgrade reflects improved fundamentals, valuation metrics, and market positioning, making it a preferred pick among large-cap stocks in the electrical cables industry.

Interpreting the Open Interest Surge: Directional Bets and Market Sentiment

The 13.45% increase in open interest, alongside rising volumes, suggests that traders are positioning for a potential upward move in Polycab’s stock price. Open interest growth in derivatives typically indicates fresh capital entering the market, often reflecting directional bets rather than mere hedging or position squaring.

Given Polycab’s proximity to its 52-week high and strong technical positioning, it is plausible that market participants are anticipating continued strength driven by robust demand in the cables and electricals sector. The sector’s ongoing infrastructure developments and electrification trends provide a favourable backdrop for Polycab’s growth prospects.

Moreover, the liquidity profile of the stock supports sizeable trades, with the stock’s liquidity allowing for trade sizes up to ₹2.51 crores based on 2% of the 5-day average traded value. This ensures that institutional investors can build or unwind positions without significant price impact, further encouraging active participation in the derivatives market.

Risks and Considerations

While the open interest surge and technical indicators point towards bullish sentiment, investors should remain cautious of potential volatility. The stock underperformed its sector by 0.75% on the day, signalling some short-term profit-taking or sector rotation. Additionally, macroeconomic factors such as commodity price fluctuations, regulatory changes, and global supply chain disruptions could impact Polycab’s performance.

Investors should also monitor the derivatives market closely for any sudden shifts in open interest or volume that might indicate changing market sentiment or increased speculative activity. A sustained increase in put option open interest, for example, could signal rising hedging or bearish bets, which would warrant a reassessment of the stock’s outlook.

Outlook and Investor Takeaways

Polycab India Ltd’s recent surge in open interest and volume in the derivatives market, combined with its strong technical positioning and fundamental upgrades, make it an attractive proposition for investors seeking exposure to the cables and electricals sector. The stock’s Buy grade with a Mojo Score of 78.0 reflects improved quality and growth prospects, supported by rising investor participation and liquidity.

Investors should consider the stock’s proximity to its 52-week high as a positive technical signal, while also remaining vigilant to sector dynamics and broader market conditions. The derivatives market activity suggests that institutional and retail traders alike are positioning for further gains, making Polycab a key stock to watch in the near term.

Overall, the combination of rising open interest, strong volume, and fundamental upgrades points to a bullish market consensus on Polycab India Ltd, with potential for continued appreciation as infrastructure and electrification demand sustains momentum.

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