Union Bank of India Sees Sharp Open Interest Surge Signalling Market Positioning Shift

Open Interest and Volume Dynamics

On 23 January 2026, Union Bank of India’s open interest (OI) in derivatives rose sharply by 4,425 contracts, representing an 11.24% increase from the previous day’s 39,381 contracts to 43,806. This surge in OI was accompanied by a total volume of 51,179 contracts, indicating robust trading activity. The futures segment alone accounted for a value of approximately ₹1,19,401.73 lakhs, while the options segment’s notional value stood at an impressive ₹28,443.40 crores, culminating in a combined derivatives turnover of ₹1,21,878.61 lakhs.

The underlying stock price closed at ₹172, having touched an intraday high of ₹178.99, marking a 2.41% gain during the session. However, the day’s closing price reflected a slight decline of 0.69%, underperforming the intraday peak but still outperforming the broader public sector bank sector, which fell by 1.94%. The Sensex also declined by 0.75% on the same day, underscoring the stock’s relative resilience.

Market Positioning and Technical Context

The increase in open interest alongside elevated volumes typically signals fresh positions being established rather than existing ones being squared off. This suggests that market participants are actively repositioning themselves, potentially anticipating a directional move in Union Bank of India’s stock. The stock’s price remains above its 20-day, 50-day, 100-day, and 200-day moving averages, indicating a sustained medium- to long-term uptrend. However, it trades below its 5-day moving average, hinting at short-term consolidation or mild correction.

Investor participation, as measured by delivery volume, has declined by 21.05% compared to the five-day average, with 96.82 lakh shares delivered on 22 January. This drop in delivery volume suggests that while derivatives activity is intensifying, actual shareholding changes are more subdued, possibly reflecting speculative positioning rather than fundamental accumulation.

Implications of the Open Interest Surge

The 11.24% rise in open interest is significant in the context of Union Bank of India’s large-cap status and its ₹1,32,504.13 crore market capitalisation. Such a jump often precedes notable price movements, as traders establish new bets on future price direction. Given the mixed price action—intraday highs contrasting with a slight closing dip—the market appears to be in a state of indecision, with participants hedging or speculating on volatility ahead.

Notably, the stock outperformed its sector by 0.91% during the session, which may indicate selective buying interest despite broader sector weakness. The liquidity profile remains healthy, with the stock capable of supporting trade sizes up to ₹8.1 crore based on 2% of the five-day average traded value, ensuring that institutional investors can operate without significant market impact.

Mojo Score Upgrade and Analyst Sentiment

MarketsMOJO has upgraded Union Bank of India’s Mojo Grade from Hold to Buy as of 28 October 2025, reflecting improved confidence in the stock’s fundamentals and technical outlook. The current Mojo Score stands at a robust 78.0, signalling strong buy sentiment. The market cap grade remains at 1, consistent with its large-cap classification, underscoring the stock’s prominence in the public sector banking space.

Despite the recent day’s price decline of 1.09%, the upgrade suggests that analysts expect the bank to benefit from favourable sectoral trends, improving asset quality, and steady earnings growth. The upgrade also aligns with the observed increase in derivatives open interest, which may be driven by institutional investors positioning for a positive medium-term outlook.

Directional Bets and Potential Market Scenarios

The surge in open interest combined with elevated futures and options values points to increased speculative activity. Traders may be anticipating a breakout above the recent intraday high of ₹178.99, supported by the stock’s position above key moving averages. Alternatively, the short-term dip below the 5-day moving average could attract put option buying as a hedge against downside risk.

Given the mixed signals, market participants should monitor the evolution of open interest in the coming sessions. A sustained rise in OI accompanied by price appreciation would confirm bullish conviction, while a decline in OI with falling prices might indicate profit-taking or position unwinding.

Sectoral and Broader Market Context

Union Bank of India’s performance relative to the public sector bank sector and the Sensex is noteworthy. While the sector declined by 1.94% and the Sensex by 0.75%, Union Bank outperformed both benchmarks, signalling relative strength. This may attract investors seeking exposure to resilient banking stocks amid broader market volatility.

However, the falling delivery volume suggests caution, as lower investor participation in the cash segment could limit sustained upward momentum. The derivatives market, therefore, appears to be the primary arena for positioning, with traders using futures and options to express directional views or hedge existing exposures.

Investor Takeaway

For investors and traders, the recent open interest surge in Union Bank of India’s derivatives market signals an active repositioning phase. While the stock’s technicals remain broadly positive, short-term volatility is likely as market participants digest sectoral developments and broader economic cues.

Given the stock’s liquidity and large-cap status, it remains an attractive candidate for both institutional and retail investors seeking exposure to the public sector banking segment. However, the divergence between derivatives activity and delivery volumes suggests that caution is warranted, with a focus on monitoring price and volume trends closely.

In summary, Union Bank of India’s derivatives market activity points to a growing interest in directional bets, with a slight bullish bias supported by the Mojo upgrade and relative sector outperformance. Investors should watch for confirmation through sustained price moves and open interest trends before committing significant capital.

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