Open Interest and Volume Dynamics
On 23 January 2026, POWERGRID's open interest (OI) in futures and options contracts rose sharply to 1,00,435 contracts from 90,020 the previous day, marking an increase of 10,415 contracts or 11.57%. This uptick in OI was accompanied by a futures volume of 31,535 contracts, indicating robust trading activity. The combined futures and options value stood at approximately ₹92,160 lakhs, with futures contributing ₹90,636 lakhs and options an overwhelming ₹6,57,894.9 lakhs, underscoring the significant derivatives market interest in the stock.
The underlying stock price closed at ₹254, hovering just 2.96% above its 52-week low of ₹247.3. Intraday, the stock touched a low of ₹253.3, down 2.3% on the day, reflecting selling pressure. The stock's 1-day return of -1.85% underperformed the sector's decline of -1.55% and the Sensex's modest fall of -0.23%, signalling relative weakness.
Technical and Trend Analysis
POWERGRID is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — indicating a sustained downtrend. The recent two-day rally was short-lived as the stock reversed sharply, suggesting that bears remain in control. Delivery volumes surged to 1.2 crore shares on 22 January, a 42.11% increase over the five-day average, signalling rising investor participation but possibly more selling than buying given the price decline.
The stock offers a dividend yield of 3.43% at current prices, which may provide some income cushion for investors, but this has not been sufficient to arrest the recent downtrend.
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Market Positioning and Directional Bets
The sharp rise in open interest alongside increased volume suggests that market participants are actively repositioning themselves in POWERGRID derivatives. Given the stock's recent price weakness and proximity to its 52-week low, the surge in OI likely reflects an increase in bearish bets, including fresh short positions or put option accumulation.
Interestingly, the futures value of ₹90,636 lakhs compared to the underlying market cap of ₹2,36,653.86 crore (large cap) indicates substantial leverage and speculative interest. The disproportionate options value, exceeding ₹6,57,894 lakhs, points to significant hedging or directional strategies being employed by institutional players.
Investors should note that the stock's Mojo Score has deteriorated to 21.0, with a downgrade from Sell to Strong Sell on 31 December 2024, reflecting weakening fundamentals and technicals. The Market Cap Grade remains at 1, indicating limited growth prospects relative to peers.
Sector and Broader Market Context
POWERGRID operates in the power sector, which has been under pressure due to regulatory challenges and subdued demand growth. The stock's underperformance relative to the sector and benchmark indices suggests that investors are cautious about near-term earnings visibility and capital expenditure plans.
Liquidity remains adequate, with the stock able to support trade sizes of up to ₹6.65 crore based on 2% of the five-day average traded value, ensuring that institutional investors can enter or exit positions without significant market impact.
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Implications for Investors
The surge in open interest combined with declining prices and negative technical indicators suggests that the market consensus is bearish on POWERGRID in the near term. Investors holding the stock should be cautious and consider risk management strategies, especially given the stock’s strong sell rating and deteriorating fundamentals.
For traders, the increased derivatives activity offers opportunities to capitalise on volatility, but the directional bias appears skewed towards downside risk. Monitoring changes in open interest alongside price action will be critical to gauge whether the current bearish momentum sustains or if a reversal emerges.
Long-term investors may find the dividend yield attractive, but must weigh this against the stock’s technical weakness and sector headwinds. Diversification into other power sector stocks with stronger fundamentals or into alternative sectors may be prudent at this juncture.
Conclusion
Power Grid Corporation of India Ltd is currently experiencing a notable increase in derivatives open interest, reflecting heightened market positioning and speculative activity. However, the prevailing technical downtrend, weak price performance relative to sector peers, and a strong sell rating underscore significant near-term risks. Investors and traders alike should approach the stock with caution, closely monitoring open interest trends and price movements to inform their strategies.
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