Tata Power Sees Sharp Open Interest Surge Amid Bearish Momentum

Open Interest and Volume Dynamics

On 27 Jan 2026, Tata Power’s open interest (OI) in derivatives rose sharply to 1,01,397 contracts from the previous 90,372, marking an increase of 11,025 contracts or 12.2%. This rise in OI is accompanied by a futures volume of 49,934 contracts, reflecting active participation in the derivatives market. The futures value stands at ₹1,15,636.22 lakhs, while the options value is significantly larger at ₹15,268.56 crores, indicating a substantial amount of capital flowing through options trading.

The total derivatives value aggregates to approximately ₹1,22,161.81 lakhs, underscoring the sizeable market interest in Tata Power’s contracts. The underlying stock price is currently ₹344, trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—highlighting a bearish technical setup.

Price Performance and Market Sentiment

Tata Power has been under pressure recently, with the stock declining for two consecutive sessions, resulting in a cumulative loss of 2.48%. The one-day return on 27 Jan was a modest -0.19%, slightly outperforming the sector’s 1-day return of -0.28%, but lagging behind the Sensex’s positive 0.23% gain. This relative underperformance aligns with the company’s current Mojo Grade of Strong Sell, upgraded from Sell on 12 Jan 2026, reflecting deteriorating fundamentals and market sentiment.

Investor participation has been rising, as evidenced by the delivery volume of 19.51 lakh shares on 23 Jan, which is 14.84% higher than the five-day average delivery volume. This increase in delivery volume suggests that despite the bearish price action, some investors are accumulating shares, possibly anticipating a longer-term recovery or hedging their positions through derivatives.

Interpreting the Open Interest Surge

The 12.2% increase in open interest is significant in the context of a declining stock price and bearish technical indicators. Rising OI alongside falling prices typically indicates that new short positions are being added, reflecting bearish bets by market participants. This is consistent with Tata Power’s Mojo Grade of Strong Sell, suggesting that traders are positioning for further downside or volatility.

However, the elevated options value, which dwarfs the futures value, points to active hedging and speculative strategies. Options provide investors with the flexibility to take directional bets with limited risk or to protect existing holdings. The large options market activity may indicate that some investors are buying puts to hedge against further declines or engaging in complex strategies such as spreads to capitalise on expected volatility.

Liquidity and Trading Viability

Tata Power’s liquidity remains adequate for sizeable trades, with the stock’s traded value supporting a trade size of approximately ₹2.63 crore based on 2% of the five-day average traded value. This level of liquidity is crucial for institutional investors and traders who require efficient entry and exit points without significant price impact.

Despite the bearish undertone, the rising delivery volumes suggest that some investors are accumulating shares on dips, possibly viewing the current weakness as a buying opportunity or a hedge against their derivatives positions. This mixed behaviour highlights the complexity of market sentiment surrounding Tata Power at present.

Sector and Market Context

Within the power sector, Tata Power’s performance is broadly in line with peers, as the sector index declined by 0.28% on the same day. The Sensex’s modest gain of 0.23% contrasts with the sector’s weakness, indicating that broader market optimism is not currently favouring power stocks. Tata Power’s large market capitalisation of ₹1,10,111.40 crore places it among the sector’s heavyweight stocks, making its price and derivatives movements influential for sectoral sentiment.

Outlook and Investor Considerations

Given the current technical and derivatives market signals, Tata Power appears to be under sustained selling pressure with increased bearish positioning. The stock trading below all major moving averages and the strong sell Mojo Grade reinforce the cautious stance. Investors should be wary of further downside risks in the near term.

However, the rising delivery volumes and active options market suggest that some participants are hedging or selectively accumulating, which could provide support if broader market conditions improve. Investors with a higher risk tolerance might consider monitoring open interest trends and volume patterns closely for signs of a potential reversal or volatility spike.

In summary, the surge in open interest amid falling prices points to a market consensus leaning towards bearish bets on Tata Power, but the sizeable options activity and delivery volumes indicate a nuanced positioning landscape that warrants careful analysis.

Key Metrics at a Glance

• Open Interest: 1,01,397 contracts (up 12.2%)


• Futures Volume: 49,934 contracts


• Futures Value: ₹1,15,636.22 lakhs


• Options Value: ₹15,268.56 crores


• Underlying Price: ₹344


• Mojo Grade: Strong Sell (upgraded from Sell on 12 Jan 2026)


• Market Cap: ₹1,10,111.40 crore (Large Cap)


• Delivery Volume (23 Jan): 19.51 lakh shares (+14.84% vs 5-day avg)


• Liquidity: Supports trade size of ₹2.63 crore

Conclusion

Tata Power’s derivatives market activity reveals a clear increase in bearish sentiment, with open interest surging alongside falling prices and a downgrade to a Strong Sell rating. While the stock remains under pressure technically, the active options market and rising delivery volumes suggest that some investors are positioning for volatility or potential recovery. Market participants should remain vigilant and consider these factors when assessing Tata Power’s near-term prospects.

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