Varun Beverages Gains 1.01%: 7 Key Factors Driving Mixed Technical Momentum

16 February: Positive Start Amid Broader Market Gains

Varun Beverages began the week on a strong note, closing at Rs.455.65, up 1.40% from the previous Friday’s close of Rs.449.35. This outpaced the Sensex’s 0.70% gain to 36,787.89, reflecting early optimism. The stock’s volume was robust at 1,57,293 shares, signalling active investor interest. The beverages sector was supported by stable demand trends, contributing to the positive momentum.

17 February: Death Cross Formation Amid Modest Price Gain

On 17 February, Varun Beverages formed a Death Cross as its 50-day moving average crossed below the 200-day moving average, a classic bearish technical signal. Despite this, the stock managed a 0.53% gain to Rs.458.05, slightly outperforming the Sensex’s 0.32% rise to 36,904.38. The mixed signals suggested that while medium to long-term momentum was weakening, short-term buying interest persisted. The downgrade to a Sell rating by MarketsMOJO was foreshadowed by this technical deterioration.

18 February: Golden Cross Emerges, Downgrade to Sell, and Open Interest Spike

In a surprising technical reversal, Varun Beverages formed a Golden Cross on 18 February, with the 50-day moving average crossing above the 200-day average, signalling a potential bullish breakout. However, this was accompanied by a downgrade from Hold to Sell by MarketsMOJO, citing valuation concerns and flat recent financial performance. The stock closed at Rs.463.50, up 1.19%, outperforming the Sensex’s 0.43% gain.

Notably, the derivatives market saw a sharp 13.7% surge in open interest, rising from 67,016 to 76,170 contracts, despite the stock price declining intraday by 1.87%. This divergence suggested active positioning by traders, possibly reflecting hedging or speculative strategies amid uncertain momentum.

19 February: Mixed Technical Signals and Price Recovery

On 19 February, Varun Beverages exhibited a technical momentum shift from bearish to mildly bearish, reflecting a nuanced market stance. The stock rebounded 1.19% to Rs.463.50, outperforming the Sensex’s 1.45% decline to 36,523.88. Daily moving averages turned mildly bullish, and the weekly Know Sure Thing (KST) indicator showed positive momentum, though monthly indicators remained cautious.

Despite this short-term strength, the stock remained below key longer-term moving averages, and Bollinger Bands indicated ongoing volatility with a bearish bias. Delivery volumes increased, signalling some investor conviction amid the mixed signals.

20 February: Renewed Open Interest Surge Amidst Cautious Price Action

Varun Beverages saw another significant open interest increase of 11.4% on 20 February, rising to 74,136 contracts. Futures volume remained active at 30,849 contracts, with combined futures and options values exceeding ₹9,67,500 lakhs. Despite this, the stock closed marginally lower at Rs.453.90, down 0.02%, while the Sensex gained 0.41%.

The stock traded below all major moving averages, signalling persistent medium to long-term bearishness. Delivery volumes declined by over 33% compared to the previous day, indicating reduced conviction among long-term holders. The mixed price and volume patterns suggest that the derivatives market activity may be driven by speculative or hedging strategies rather than a clear directional consensus.

Key Takeaways

Positive Signals: The week saw a brief Golden Cross formation, suggesting potential for a bullish breakout. Short-term momentum indicators such as daily moving averages and weekly KST showed signs of recovery, with the stock outperforming the Sensex on multiple days. Increased delivery volumes on 19 February indicated some investor conviction amid volatility.

Cautionary Signals: The Death Cross formation and sustained trading below key moving averages highlight medium to long-term bearish momentum. The downgrade to a Sell rating by MarketsMOJO reflects concerns over valuation and flat recent financial results. Sharp surges in derivatives open interest amid declining or stagnant prices suggest speculative positioning rather than broad-based buying. Declining delivery volumes on 20 February further indicate waning conviction among long-term holders.

Market Context: Varun Beverages remains a large-cap leader in the beverages sector with strong historical returns over three and five years. However, recent underperformance relative to the Sensex and mixed technical signals underscore a period of consolidation and uncertainty. The beverages sector’s defensive characteristics may provide some support, but investors should remain vigilant amid evolving market dynamics.

Conclusion

Varun Beverages Ltd’s performance in the week ending 20 February 2026 was characterised by mixed technical signals and active market participation. The formation of both Death and Golden Crosses within days reflects a volatile momentum landscape, while the downgrade to a Sell rating and valuation concerns temper optimism. Sharp increases in derivatives open interest point to heightened market activity but also caution, as price movements did not consistently confirm bullish sentiment.

Investors should approach Varun Beverages with prudence, monitoring key technical levels and volume trends closely. The stock’s resilience above short-term moving averages and occasional outperformance of the Sensex offer some encouragement, but the prevailing medium to long-term bearish indicators and valuation challenges suggest that caution remains warranted. Continued observation of derivatives activity and fundamental developments will be essential to assess the stock’s next directional move within the competitive beverages sector.

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