Union Bank of India Sees Sharp Open Interest Surge Signalling Renewed Market Interest

Open Interest and Volume Dynamics

On 22 January 2026, Union Bank of India’s open interest (OI) in derivatives rose sharply to 44,405 contracts, up 4,629 contracts or 11.64% from the previous day’s 39,776. This substantial increase in OI indicates fresh positions being established rather than existing ones being squared off, reflecting heightened market participation and interest in the stock’s future price movement.

Simultaneously, the volume in futures contracts stood at 42,162, closely tracking the open interest, which suggests active trading and liquidity in the derivatives market. The futures value traded was approximately ₹97,654.78 lakhs, while the options segment exhibited a massive notional value of ₹23,440.44 crores, underscoring the significant capital flow and hedging activity around Union Bank of India.

Price and Trend Context

Union Bank’s underlying stock price closed at ₹174, just 4.87% shy of its 52-week high of ₹182.90. The stock has recently reversed its short-term downtrend, gaining after two consecutive days of decline. Intraday, it touched a high of ₹177.66, marking a 3.01% rise on the day, although it slightly underperformed its sector, which gained 1.94%, while the Sensex rose 0.48%.

Technically, the stock trades above its 20-day, 50-day, 100-day, and 200-day moving averages, signalling a sustained bullish trend over the medium to long term. However, it remains below the 5-day moving average, indicating some short-term consolidation or profit booking. Notably, delivery volumes have fallen sharply by 53.12% compared to the five-day average, suggesting reduced investor participation in the cash segment despite the derivatives activity.

Market Positioning and Directional Bets

The surge in open interest alongside rising volumes points to increased speculative and hedging activity. Traders appear to be positioning for a potential upward move, supported by the stock’s proximity to its 52-week high and recent trend reversal. The increase in OI by over 11% is significant in the context of a large-cap public sector bank, where institutional and retail participation often drives momentum.

Given the futures and options notional values, market participants are likely deploying a mix of directional and volatility strategies. The elevated options value suggests active use of calls and puts for hedging or speculative plays, possibly anticipating volatility around upcoming corporate or macroeconomic events. The futures volume and OI growth reinforce a bullish bias, with traders possibly expecting the stock to test or breach its recent highs.

Mojo Score Upgrade and Market Implications

Union Bank of India’s Mojo Score has recently been upgraded to 78.0, reflecting a Buy rating from the previous Hold grade as of 28 October 2025. This upgrade underscores improving fundamentals, technical strength, and positive market sentiment. The bank’s market capitalisation stands at ₹1,33,145.35 crores, categorising it as a large-cap stock with robust institutional interest.

The market cap grade of 1 further confirms its standing among the top-tier stocks in the public sector banking space. Despite a modest underperformance relative to its sector on the day, the stock’s overall trend and derivatives activity suggest that investors are positioning for a sustained rally, potentially driven by improving asset quality, credit growth, or macroeconomic tailwinds.

Liquidity and Trading Considerations

Liquidity remains adequate for sizeable trades, with the stock’s traded value supporting a trade size of approximately ₹13.38 crores based on 2% of the five-day average traded value. This level of liquidity is favourable for institutional investors and traders looking to build or unwind positions without significant market impact.

However, the sharp decline in delivery volumes indicates caution among long-term investors, possibly awaiting clearer signals or quarterly results before committing fresh capital. The derivatives market, therefore, appears to be the primary arena for active positioning and speculation at present.

Sector and Benchmark Comparison

Within the public sector banking sector, Union Bank’s recent performance and derivatives activity stand out. While the sector gained 1.94% on the day, Union Bank’s 1.13% rise, though slightly lagging, is supported by strong technicals and increased open interest. Compared to the broader Sensex gain of 0.48%, the stock’s relative strength is evident, particularly given its proximity to 52-week highs.

Investors should note that the derivatives market’s positioning often precedes moves in the underlying stock. The current OI surge and volume patterns may signal an impending breakout or a consolidation phase before a decisive directional move. Monitoring open interest changes alongside price action will be crucial for anticipating the stock’s near-term trajectory.

Outlook and Investor Takeaways

Union Bank of India’s derivatives market activity suggests a growing bullish sentiment, supported by technical strength and a recent upgrade in its Mojo Grade to Buy. The significant open interest increase, coupled with high futures and options notional values, indicates that traders are positioning for potential upside while managing risk through options strategies.

However, the decline in delivery volumes and slight underperformance relative to the sector caution investors to watch for confirmation signals before committing heavily. The stock’s liquidity profile supports active trading, making it an attractive candidate for both short-term traders and medium-term investors seeking exposure to the public sector banking space.

Overall, the combination of strong derivatives market positioning, technical resilience, and fundamental upgrades positions Union Bank of India as a compelling stock to watch in the coming weeks.

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