Union Bank of India Sees Sharp Open Interest Surge Amid Mixed Market Signals

Open Interest and Volume Dynamics

On 25 Feb 2026, Union Bank of India’s open interest (OI) surged to 23,087 contracts from 20,874 the previous day, marking an increase of 2,213 contracts or 10.6%. This rise in OI, coupled with a futures volume of 18,096 contracts, indicates a significant build-up of positions in the derivatives market. The futures value stood at ₹45,438.52 lakhs, while the options segment contributed a substantial ₹11,896.64 crores in notional value, bringing the total derivatives value to approximately ₹48,912.92 lakhs.

This spike in open interest is particularly noteworthy given the underlying stock price closed at ₹197, having hit a new 52-week high of ₹202.54 earlier in the session. The increase in OI alongside elevated volumes often reflects fresh capital entering the market, either through new long or short positions, suggesting that traders are actively repositioning ahead of anticipated price movements.

Price Performance and Technical Context

Despite the surge in derivatives activity, Union Bank’s stock price declined by 1.52% on the day, underperforming its public sector banking peers by 0.3% and the broader Sensex, which gained 0.18%. This price retreat followed three consecutive days of gains, signalling a potential short-term trend reversal. However, the stock remains technically robust, trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, underscoring sustained medium- to long-term bullish momentum.

Investor participation, as measured by delivery volume, has shown signs of waning. On 24 Feb, delivery volume fell by 11.35% to 79.5 lakh shares compared to the five-day average, suggesting some profit-booking or cautious stance among long-term holders. Nevertheless, liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹8.22 crores, ensuring smooth execution for institutional and retail investors alike.

Market Positioning and Directional Bets

The sharp increase in open interest, despite the stock’s slight price decline, suggests a complex interplay of market forces. Traders may be establishing fresh long positions anticipating a rebound, or alternatively, building short positions to hedge against potential downside risks. The elevated options notional value points to active call and put writing, which often reflects strategic hedging or speculative directional bets.

Given the stock’s recent 52-week high and strong moving average support, the derivatives activity could be interpreted as a consolidation phase where market participants are positioning for a breakout or a correction. The 10.6% rise in OI is significant in the context of the bank’s large-cap status and ₹1,50,824.78 crore market capitalisation, indicating that institutional players are likely involved in these trades.

Mojo Score Upgrade and Analyst Sentiment

Adding to the positive outlook, Union Bank of India’s Mojo Score has improved to 81.0, earning a “Strong Buy” grade as of 2 Feb 2026, upgraded from a previous “Buy” rating. This upgrade reflects enhanced fundamentals, valuation attractiveness, and technical strength, reinforcing the bank’s appeal to investors seeking exposure to the public sector banking sector.

The market cap grade remains at 1, confirming the stock’s large-cap status and liquidity profile. Despite the day’s negative price movement (-1.64%), the overall sentiment remains constructive, supported by the bank’s solid financials and improving credit metrics.

Sector and Broader Market Context

Union Bank’s performance must also be viewed in the context of the public sector banking sector, which saw a 1.13% decline on the day. The bank’s marginal underperformance relative to its sector peers suggests stock-specific factors influencing trading activity, possibly linked to the derivatives positioning and profit-taking after recent gains.

Meanwhile, the Sensex’s modest gain of 0.18% indicates a mixed market environment, with investors balancing optimism on economic recovery against concerns over inflation and interest rate trajectories. In such a scenario, the derivatives market often becomes a focal point for gauging investor expectations and hedging strategies.

Investor Takeaways and Outlook

For investors, the recent surge in open interest in Union Bank’s derivatives signals an active repositioning phase that could precede a significant price move. The mixed signals from price action and volume patterns suggest caution but also opportunity. Those bullish on the bank’s fundamentals and sector outlook may view the current dip as a buying opportunity, especially given the strong technical support and upgraded Mojo Score.

Conversely, traders wary of short-term volatility should monitor open interest trends closely, as a sustained increase in OI combined with falling prices could indicate growing bearish sentiment. The balance of call and put option activity will also provide clues on market expectations for volatility and directional bias.

Overall, Union Bank of India remains a key stock to watch within the public sector banking space, with derivatives market activity offering valuable insights into evolving investor sentiment and potential price trajectories.

Summary

Union Bank of India’s derivatives market has experienced a pronounced increase in open interest by 10.6%, reflecting heightened trading interest and shifting market positioning. Despite a modest price decline and underperformance relative to its sector, the bank’s technical indicators and upgraded Mojo Score support a positive medium-term outlook. Investors should closely monitor derivatives volumes and open interest trends to gauge future directional moves in this large-cap public sector bank.

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