Sun Pharmaceutical Edges Lower -0.02% Despite Bullish Derivatives Surge

Monday, 5 January: Quiet Start Amid Market Weakness

Sun Pharmaceutical Industries Ltd opened the week at Rs.1,730.15, a slight decline of 0.01% from the previous close. The stock traded with subdued volume of 1,31,178 shares as the Sensex fell 0.18% to 37,730.95. This muted start reflected cautious investor sentiment ahead of anticipated derivatives activity later in the week.

Tuesday, 6 January: Bullish Call Option Surge Drives 1.73% Gain

The stock rebounded strongly on 6 January, gaining 1.73% to close at Rs.1,760.15. This rally coincided with a significant surge in call option activity, particularly concentrated on the 1800 strike price expiring on 27 January 2026. A total of 9,904 call contracts traded, generating turnover of approximately ₹867.29 lakhs, signalling robust bullish sentiment among traders.

Despite the broader market decline with Sensex down 0.19%, Sun Pharma outperformed its sector and the benchmark index. The stock touched an intraday high of Rs.1,785.30, just 4.22% shy of its 52-week high of Rs.1,865, reinforcing technical momentum. However, delivery volumes dipped 6.65% to 10.28 lakh shares, suggesting some profit-taking or cautious positioning by long-term investors.

Wednesday, 7 January: Open Interest Surges 13.94% as Stock Hits Rs.1,782.50

On 7 January, Sun Pharma continued its upward trajectory, closing at Rs.1,782.50, up 1.27% on the day. The stock reached an intraday high of Rs.1,806.60, marking a 2.64% rise from the previous close. This price action was accompanied by a sharp 13.94% increase in open interest in the derivatives segment, rising by 10,129 contracts to 82,782.

Trading volumes in futures and options were robust, with 1,21,916 contracts exchanged. The futures segment alone accounted for ₹87,222 lakhs in value, while options notional value soared to ₹68,352 crores, culminating in a total derivatives value of ₹95,875 lakhs. This surge indicates fresh bullish positions being established, reflecting strong market confidence in further upside potential.

Despite this bullish momentum, delivery volumes remained subdued, continuing the trend from the previous day. The stock’s technical indicators remained positive, trading above all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), signalling sustained investor confidence.

Thursday, 8 January: Market Weakness Pulls Stock Down 1.18%

Sun Pharma reversed some gains on 8 January, closing at Rs.1,761.45, down 1.18%. The broader market was weak, with the Sensex plunging 1.41% to 37,137.33 amid profit-taking and sectoral pressures. The stock’s volume increased to 1,36,289 shares, reflecting heightened trading activity during the decline.

This pullback came after the strong derivatives-driven rally earlier in the week, suggesting short-term volatility as traders adjusted positions ahead of the January expiry. The stock remained above key moving averages, maintaining a positive technical setup despite the correction.

Friday, 9 January: Week Ends Slightly Lower at Rs.1,729.95

The final trading session saw Sun Pharma close at Rs.1,729.95, down 1.79% on the day and marginally below the week’s opening price. The Sensex also declined by 0.89% to 36,807.62, continuing the broader market weakness. Volume surged to 2,73,499 shares, indicating active trading as investors digested the week’s developments.

Despite the slight weekly decline of 0.02%, the stock outperformed the Sensex’s 2.62% fall, underscoring relative resilience. The derivatives market activity and technical strength throughout the week suggest that the stock remains well positioned, though short-term volatility may persist as expiry approaches.

Key Takeaways

Positive Signals: Sun Pharma demonstrated resilience by outperforming the Sensex by 2.60% over the week despite closing flat. The surge in call option activity and a 13.94% jump in open interest indicate strong bullish positioning among traders. The stock’s technical strength, trading above all major moving averages, supports a positive momentum outlook.

Cautionary Notes: Delivery volumes declined by over 6% midweek, suggesting some profit-taking or cautious long-term investor participation. The stock experienced a pullback on Thursday and Friday amid broader market weakness, highlighting short-term volatility risks as derivatives expiry approaches.

Market Context: The broader market faced significant pressure with the Sensex falling 2.62% for the week, amplifying the relative strength of Sun Pharma. The company’s large market capitalisation of ₹4,27,201.59 crores and a Mojo Score of 72.0 with a Buy rating reflect solid fundamentals underpinning the stock’s performance.

Conclusion

Sun Pharmaceutical Industries Ltd’s week was characterised by strong derivatives market activity and technical momentum, which helped it outperform a sharply declining Sensex. The surge in call option volumes and open interest signals robust bullish sentiment, with traders positioning for a potential breakout above the 1800 strike price ahead of the January expiry.

While delivery volume softness and late-week price declines introduce some caution, the stock’s overall resilience and market positioning suggest it remains a key player in the Pharmaceuticals & Biotechnology sector. Investors and traders should monitor open interest trends and delivery participation closely in the coming weeks to assess the sustainability of this momentum amid broader market volatility.

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