Open Interest and Volume Dynamics
On 23 Feb 2026, Sun Pharma's open interest in derivatives rose sharply by 15,407 contracts, an 11.74% increase from the previous day's 131,217 contracts to 146,624. This substantial uptick in OI was accompanied by a futures volume of 80,340 contracts, underscoring heightened trading activity. The combined futures and options value stood at approximately ₹17,71,65 lakhs, with futures contributing ₹1,76,091 lakhs and options an overwhelming ₹31,044 crores in notional value.
The underlying stock price closed at ₹1,731, maintaining a narrow trading range of ₹13.7 for the day. Despite the modest 0.36% gain, the stock has been on a positive trajectory, registering a 1.11% return over the past two consecutive trading sessions. This steady price movement, coupled with rising OI, suggests that market participants are increasingly positioning for a directional move rather than mere short-term volatility.
Market Positioning and Investor Sentiment
The rise in open interest alongside volume growth typically indicates fresh capital entering the market, either through new long positions or short sellers increasing their exposure. In Sun Pharma's case, the sustained gains and the stock trading above all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—point towards a bullish bias among investors.
Delivery volumes further corroborate this trend, with 9.45 lakh shares delivered on 20 Feb, marking a 20.21% increase over the five-day average delivery volume. This heightened investor participation signals confidence in the stock's near-term prospects, possibly driven by positive sectoral momentum within Pharmaceuticals & Biotechnology, which itself posted a 0.50% gain on the day, slightly outperforming Sun Pharma's 0.36%.
Valuation and Market Capitalisation Context
Sun Pharmaceutical Industries Ltd remains a dominant player in the pharmaceuticals sector with a market capitalisation of ₹4,15,228.91 crores, categorising it firmly as a large-cap stock. Despite a recent downgrade from a Buy to Hold rating on 16 Feb 2026, reflected in its Mojo Score of 62.0, the stock continues to attract significant trading interest. The downgrade likely reflects a cautious stance amid valuation concerns or sector headwinds, yet the ongoing accumulation in derivatives suggests that some investors are betting on a rebound or sustained strength.
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Derivative Market Implications
The surge in open interest is particularly significant in the context of derivatives, as it often precedes notable price movements. The increase of nearly 12% in OI suggests that traders are either establishing new positions or rolling over existing ones, anticipating directional moves in the stock. Given the stock’s current upward momentum and strong technical positioning, the bias appears to lean towards bullish bets.
However, the sizeable options notional value—₹31,044 crores—indicates that hedging activity remains robust, with market participants possibly balancing directional exposure with protective strategies. This complexity in positioning reflects a market that is cautiously optimistic but prepared for volatility, a common scenario in large-cap pharmaceutical stocks amid evolving regulatory and market dynamics.
Comparative Sector and Benchmark Performance
Sun Pharma’s 0.36% gain on the day slightly lagged the Pharmaceuticals & Biotechnology sector’s 0.50% rise and the Sensex’s 0.44% increase. This relative underperformance, despite strong derivative activity, may be attributed to profit-taking or cautious sentiment following the recent rating downgrade. Nonetheless, the stock’s ability to maintain gains above all major moving averages and the rising delivery volumes indicate underlying strength.
Investors should note that the stock’s liquidity supports sizeable trades, with a 2% threshold of the five-day average traded value allowing for trade sizes up to ₹4.19 crores without significant market impact. This liquidity is crucial for institutional investors and large traders looking to capitalise on the current momentum.
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Investor Takeaways and Outlook
The recent surge in open interest combined with steady price gains and rising delivery volumes suggests that Sun Pharmaceutical Industries Ltd is attracting renewed investor interest. While the Hold rating and Mojo Score of 62.0 reflect some caution, the technical and derivatives market data point to a constructive near-term outlook.
Investors should monitor the evolving open interest trends closely, as sustained increases often precede significant directional moves. The balance between futures and options activity also warrants attention, as it may reveal shifts in hedging strategies or speculative positioning. Given the stock’s large-cap status and sector leadership, it remains a key bellwether for the Pharmaceuticals & Biotechnology space.
In summary, Sun Pharma’s derivatives market activity signals growing conviction among traders, with a tilt towards bullish positioning amid a stable price environment. Market participants should weigh these factors alongside fundamental developments and sector trends to make informed investment decisions.
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