Tech Mahindra Sees Significant Open Interest Surge Amid Bullish Market Positioning

Open Interest and Volume Dynamics

On 23 Jan 2026, Tech Mahindra's open interest (OI) in derivatives rose sharply by 8,755 contracts, a 16.51% increase from the previous figure of 53,039 to 61,794. This substantial rise in OI is accompanied by a futures volume of 49,415 contracts, indicating heightened trading activity and investor interest. The combined futures and options value stands at approximately ₹22,115.99 crores, with futures contributing ₹2,188.01 crores and options an overwhelming ₹28,884.02 crores in notional value, underscoring the stock's liquidity and attractiveness in the derivatives market.

Such a pronounced increase in open interest, especially when paired with rising volumes, often suggests fresh capital entering the market rather than existing positions merely rolling over. This can be interpreted as a sign of conviction among traders, potentially anticipating further price movement in the underlying stock.

Price Performance and Technical Positioning

Tech Mahindra closed at ₹1,704, just 1.87% shy of its 52-week high of ₹1,736.40. The stock has recorded gains for three consecutive sessions, delivering a cumulative return of 1.55% over this period. Notably, it outperformed its sector by 1.11% and the Sensex by a significant margin, with the benchmark index declining 0.77% on the same day.

From a technical standpoint, Tech Mahindra is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a robust upward trend. This alignment of moving averages often attracts momentum traders and institutional investors, reinforcing bullish sentiment.

However, delivery volumes have seen a decline, with 19.27 lakh shares delivered on 22 Jan, down 21.35% compared to the five-day average. This suggests that while short-term trading activity is high, longer-term investor participation may be moderating, possibly indicating a shift towards more speculative or derivative-driven positioning.

Market Positioning and Directional Bets

The surge in open interest alongside rising volumes in futures and options suggests that traders are actively positioning for a directional move. Given the stock’s proximity to its 52-week high and positive price momentum, the bias appears to be bullish. Market participants may be employing call options and long futures contracts to capitalise on anticipated upside potential.

Tech Mahindra’s Mojo Score of 71.0, upgraded from a previous Hold rating to a Buy on 14 Jan 2026, further supports this positive outlook. The upgrade reflects improved fundamentals and technical strength, encouraging investors to increase exposure. The company’s large market capitalisation of ₹1,67,071.88 crores and a Market Cap Grade of 1 indicate strong institutional interest and liquidity, making it a preferred choice for sizeable trades.

Despite the encouraging signals, the decline in delivery volumes hints at a cautious stance among long-term investors, possibly due to valuation concerns or broader market uncertainties. This divergence between derivative market enthusiasm and underlying shareholding patterns warrants close monitoring.

Sector and Benchmark Comparison

Within the Computers - Software & Consulting sector, Tech Mahindra’s outperformance is notable. While the sector index declined by 0.16% on the day, TECHM gained 1.06%, highlighting its relative strength. This outperformance amid a broadly negative market environment suggests company-specific catalysts or favourable earnings expectations may be driving investor interest.

Trading liquidity remains robust, with the stock’s average traded value supporting trade sizes up to ₹15.62 crores based on 2% of the five-day average. This liquidity facilitates smooth execution of large derivative trades, further attracting institutional players.

Implications for Investors

The marked increase in open interest and volume in Tech Mahindra’s derivatives market signals growing confidence among traders in the stock’s near-term prospects. Investors should consider this alongside the company’s upgraded Mojo Grade and strong technical positioning when evaluating entry points.

However, the contrasting decline in delivery volumes suggests some caution is warranted. Investors may wish to monitor whether the recent derivative market enthusiasm translates into sustained buying in the cash market or if it remains speculative in nature.

Given the stock’s proximity to its 52-week high and the broader market volatility, risk management remains crucial. Utilising options strategies to hedge positions or capitalise on volatility could be prudent for sophisticated investors.

Outlook

Tech Mahindra’s current market dynamics, characterised by a strong open interest surge, rising volumes, and positive price momentum, point towards a bullish near-term outlook. The company’s leadership in the Computers - Software & Consulting sector, combined with favourable technical and fundamental indicators, supports this view.

Nonetheless, investors should remain vigilant to shifts in market sentiment and delivery trends, which may signal changes in underlying investor conviction. Continuous analysis of derivative positioning alongside cash market activity will be key to realising the stock’s potential.

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