Tech Mahindra Sees Significant Open Interest Surge Signalling Market Positioning Shift

Open Interest and Volume Dynamics

On 21 January 2026, Tech Mahindra's open interest in derivatives climbed from 52,971 contracts to 58,886, marking an increase of 5,915 contracts or 11.17%. This rise in OI is significant given the stock's underlying price of ₹1,698, which is just 2.32% shy of its 52-week high of ₹1,736.4. The volume for the day stood at 49,428 contracts, indicating robust trading activity supporting the OI expansion.

The futures segment alone accounted for a value of approximately ₹1,84,012 lakhs, while the options segment's notional value was substantially higher at ₹32,504.42 crores. The combined derivatives value reached ₹1,86,884 lakhs, underscoring the heavy interest in Tech Mahindra's contracts.

Such a rise in open interest alongside sustained volume typically signals fresh positions being initiated rather than existing ones being squared off. This often reflects increased conviction among market participants about the stock's near-term direction.

Price Action and Moving Averages

Tech Mahindra has been on a positive trajectory, gaining 1.1% over the last two sessions. The stock currently trades above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — indicating a strong bullish trend across multiple timeframes. This technical strength aligns with the increased derivatives activity, suggesting that traders are positioning for further upside.

However, it is noteworthy that delivery volumes have declined sharply by 65.32% compared to the five-day average, with only 8.98 lakh shares delivered on 21 January. This drop in investor participation at the delivery level could imply that short-term traders and institutional players are dominating the market, focusing on derivatives rather than outright stock accumulation.

Market Positioning and Directional Bets

The surge in open interest, especially in futures contracts, often reflects increased directional bets by traders. Given Tech Mahindra's recent upgrade from a 'Hold' to a 'Buy' rating by MarketsMOJO on 14 January 2026, with a Mojo Score of 71.0, market participants appear to be aligning with this positive outlook.

The stock's large-cap status with a market capitalisation of ₹1,66,082.36 crores and a Market Cap Grade of 1 further supports its liquidity and attractiveness for institutional investors. The liquidity metrics indicate that the stock can comfortably handle trade sizes of up to ₹14.46 crores based on 2% of the five-day average traded value, making it a viable candidate for sizeable derivative positions.

Interestingly, the stock's one-day return of 0.50% slightly trails the sector return of 0.66% but outperforms the Sensex's 0.22%, suggesting relative strength within its industry group. This relative outperformance may be encouraging traders to increase their exposure through derivatives.

Options market data, with an enormous notional value exceeding ₹32,500 crores, indicates active hedging and speculative interest. The combination of rising OI and volume in both futures and options points to a complex interplay of bullish and cautious strategies, possibly including protective puts and leveraged calls.

Technical and Fundamental Outlook

Tech Mahindra's technical indicators remain robust, with the stock comfortably above all major moving averages, signalling sustained momentum. The proximity to its 52-week high suggests limited resistance overhead, which could entice further buying interest.

Fundamentally, the company operates in the Computers - Software & Consulting sector, a space that continues to benefit from digital transformation trends globally. The recent upgrade in Mojo Grade from 'Hold' to 'Buy' reflects improved financial metrics and positive earnings outlook, reinforcing confidence among investors.

Implications for Investors and Traders

The pronounced increase in open interest and sustained volume in Tech Mahindra's derivatives signals a shift in market sentiment towards a more bullish stance. Traders appear to be positioning for further gains, supported by the stock's technical strength and positive fundamental outlook.

However, the sharp decline in delivery volumes suggests that long-term investor participation is subdued, which could imply that the current momentum is driven primarily by short-term speculative activity. Investors should therefore monitor the stock closely for confirmation of sustained buying interest in the cash segment to validate the derivatives market signals.

Given the stock's liquidity and large market capitalisation, it remains an attractive option for institutional players seeking exposure to the software and consulting sector. The upgrade in Mojo Grade and the strong Mojo Score of 71.0 further enhance its appeal as a buy candidate.

Overall, the derivatives market activity in Tech Mahindra provides valuable insights into evolving market positioning and potential directional bets, which investors and traders should factor into their decision-making process.

Conclusion

Tech Mahindra Ltd.'s recent surge in open interest by over 11% in its derivatives segment, combined with steady volume and price action near its 52-week high, reflects a growing bullish sentiment among market participants. The upgrade in rating and strong technical positioning underpin this optimism. While delivery volumes have declined, indicating lower long-term investor participation, the derivatives market activity suggests that traders are gearing up for potential upside. Investors should remain vigilant, balancing the positive signals with caution until sustained buying interest emerges in the cash market.

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