Power Grid Corporation Sees Sharp Open Interest Surge Amid Bearish Momentum

Open Interest and Volume Dynamics

On 29 Dec 2025, POWERGRID’s open interest (OI) rose sharply to 82,338 contracts from the previous 74,098, marking an increase of 8,240 contracts or 11.12%. This surge in OI was accompanied by a futures volume of 30,703 contracts, reflecting active participation in the derivatives market. The total futures value stood at approximately ₹72,393 lakhs, while the options segment exhibited a substantial notional value of ₹8,312.69 crores, underscoring the stock’s prominence in the derivatives space.

Despite this elevated activity, the underlying stock price declined by 1.92% on the day, closing near ₹260. This price movement underperformed the power sector’s 1.10% fall and the broader Sensex’s modest 0.41% decline, indicating relative weakness in POWERGRID’s equity performance.

Price Trends and Moving Averages

POWERGRID’s price has been on a downward trajectory, losing 2.84% over the past two trading sessions. The stock touched an intraday low of ₹260.15, down 2% from the previous close. Notably, the share price is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling sustained bearish momentum and a lack of short-term support.

Investor participation has also waned, with delivery volumes on 26 Dec falling by 44.13% compared to the five-day average, suggesting reduced conviction among long-term holders. This decline in delivery volume contrasts with the spike in derivatives activity, hinting that speculative traders may be driving the recent open interest surge rather than fundamental investors.

Market Positioning and Directional Bets

The sharp rise in open interest amid falling prices typically indicates that new positions are being established on the downside, suggesting that traders are increasingly bearish on POWERGRID’s near-term prospects. The combination of rising OI and declining price often reflects fresh short positions or put option buying, both of which are directional bets anticipating further weakness.

Given the stock’s liquidity, with a 5-day average traded value sufficient to support trades worth ₹5.33 crores, the derivatives market is well-equipped to absorb sizeable speculative flows. The high dividend yield of 3.35% may offer some defensive appeal, but it has not prevented the recent sell-off or the deterioration in investor sentiment.

Mojo Score and Analyst Ratings

Power Grid Corporation’s Mojo Score currently stands at a low 21.0, reflecting a Strong Sell rating, a downgrade from its previous Sell grade as of 31 Dec 2024. This downgrade aligns with the technical weakness and deteriorating fundamentals observed in the stock. The company’s market capitalisation remains robust at ₹2,42,048.21 crores, classifying it as a large-cap stock, but this has not shielded it from recent negative momentum.

Investors should note that the stock has underperformed its sector peers and the broader market, and the technical indicators suggest further downside risk unless there is a significant reversal in volume and price trends.

Implications for Investors and Traders

The current derivatives activity suggests that traders are positioning for continued volatility and potential downside in POWERGRID. The increase in open interest alongside falling prices is a classic sign of bearish sentiment gaining traction. Investors holding the stock should exercise caution and monitor key support levels closely, as the technical setup does not favour a near-term rebound.

For traders, the elevated open interest and volume in futures and options provide ample opportunities to capitalise on directional moves, but risk management remains paramount given the stock’s recent volatility and negative momentum.

Long-term investors may find the high dividend yield attractive, but the recent downgrade to a Strong Sell rating and the stock’s underperformance relative to the sector and Sensex warrant a careful reassessment of portfolio exposure.

Broader Market Context

POWERGRID’s performance must also be viewed in the context of the power sector and overall market trends. The sector has experienced moderate declines, with the stock underperforming by 0.78% relative to its peers on the day. The Sensex’s mild retreat of 0.41% indicates that the weakness in POWERGRID is more pronounced than the general market sentiment, highlighting company-specific or sector-specific challenges.

Investors should watch for upcoming corporate announcements, policy changes, or sectoral developments that could influence the stock’s trajectory. Until then, the derivatives market’s positioning suggests a cautious or bearish stance among market participants.

Summary

In summary, Power Grid Corporation of India Ltd is currently experiencing a notable surge in open interest in its derivatives, signalling increased speculative activity amid a weakening price trend. The stock’s technical indicators, including trading below all major moving averages and declining delivery volumes, reinforce the bearish outlook. The downgrade to a Strong Sell rating and underperformance relative to sector and market benchmarks further underline the risks ahead. Investors and traders should remain vigilant and consider alternative opportunities within the power sector or broader market.

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