Union Bank of India Sees Sharp Open Interest Surge Amid Strong Price Rally

Open Interest and Volume Spike: A Closer Look

The latest data reveals that Union Bank's open interest (OI) in derivatives has jumped by 8,420 contracts, a substantial 28.2% increase from the previous figure of 29,859 to 38,279. This surge is accompanied by a hefty volume of 115,138 contracts traded, indicating heightened activity and interest among traders. The futures segment alone accounts for a value of approximately ₹1,19,465 lakhs, while options contribute a staggering ₹77,554.8 crores, culminating in a total derivatives value of ₹1,34,645.7 lakhs.

This spike in OI and volume is noteworthy given the stock’s underlying price of ₹177, which has recently climbed to an intraday high of ₹180, marking a new 52-week peak. The stock outperformed its sector by 6.52% on the day, registering a 7.95% gain compared to the sector’s 1.33% and the Sensex’s marginal decline of 0.21%. Such divergence underscores strong bullish momentum and investor enthusiasm.

Price Momentum and Moving Averages Support

Union Bank’s price action has been impressive, with the stock gaining consecutively over the past four sessions, delivering an 11.02% return during this period. The weighted average price suggests that more volume has been traded closer to the lower end of the day’s price range, hinting at accumulation by buyers at relatively attractive levels. Furthermore, the stock is trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a strong uptrend and positive technical backdrop.

Investor participation is also on the rise, with delivery volumes reaching 67.4 lakh shares on 13 January, a 7.48% increase over the five-day average delivery volume. This indicates genuine buying interest rather than speculative short-term trading, which often accompanies derivatives volume spikes.

Market Positioning and Directional Bets

The sharp rise in open interest alongside strong price gains suggests that market participants are increasingly positioning for further upside in Union Bank’s shares. The 28.2% increase in OI is a clear indication that fresh long positions are being added rather than existing positions being squared off. This is corroborated by the stock’s outperformance relative to its sector and benchmark indices.

Options market data, with an enormous notional value exceeding ₹77,554 crores, points to active hedging and speculative activity. The large options value relative to futures suggests that traders may be employing complex strategies such as call buying or protective puts to capitalise on or shield against volatility. Given the stock’s recent breakout to a new high, bullish call spreads or outright call buying are plausible directional bets.

Liquidity remains robust, with the stock’s trading value comfortably supporting trade sizes up to ₹4.56 crores based on 2% of the five-day average traded value. This ensures that institutional and high-volume traders can execute sizeable positions without significant market impact, further encouraging participation.

Fundamental and Technical Ratings

Union Bank of India, a large-cap public sector bank with a market capitalisation of ₹1,36,946.88 crores, currently holds a Mojo Score of 64.0 and a Mojo Grade of Hold. This represents a downgrade from a previous Buy rating assigned on 28 October 2025, reflecting a more cautious stance amid evolving market conditions. The market cap grade stands at 1, indicating its status as a large-cap stock with stable fundamentals.

Despite the recent downgrade, the stock’s technical indicators remain favourable, supported by strong moving averages and rising investor participation. The recent price surge and open interest expansion may prompt a reassessment of the rating if momentum sustains and earnings outlook improves.

Implications for Investors

The confluence of a strong price rally, rising open interest, and increased delivery volumes suggests that Union Bank of India is currently in a phase of constructive accumulation. Investors should note that the derivatives market activity is often a leading indicator of future price moves, reflecting the collective sentiment of sophisticated traders.

However, the recent downgrade to a Hold rating signals that caution is warranted. Investors should monitor upcoming quarterly results, sectoral developments, and broader macroeconomic factors that could influence the bank’s performance. The public sector banking space remains sensitive to regulatory changes and credit growth trends, which could impact valuations.

For traders, the elevated open interest and volume provide opportunities to capitalise on momentum through futures and options strategies, but risk management remains crucial given the potential for volatility around key technical levels.

Conclusion

Union Bank of India’s derivatives market has exhibited a pronounced surge in open interest and volume, coinciding with a strong price breakout to a new 52-week high. This reflects growing bullish sentiment and increased market participation, supported by solid technical indicators and rising investor delivery volumes. While the current Mojo Grade is Hold, the evolving market dynamics and sustained momentum could prompt a positive reassessment in the near term.

Investors and traders alike should keep a close watch on the stock’s price action, derivatives positioning, and fundamental updates to navigate this phase effectively.

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