Varun Beverages Ltd Sees Sharp Open Interest Surge Amidst Weak Price Momentum

Open Interest and Volume Dynamics

On 4 Feb 2026, Varun Beverages recorded an open interest (OI) of 78,783 contracts in its derivatives, marking a 10.86% increase from the previous day’s 71,064 contracts. This rise of 7,719 contracts is significant, especially given the concurrent volume of 49,864 contracts traded. The futures segment alone accounted for a value of approximately ₹40,245 lakhs, while options contributed a staggering ₹21,949 crores in notional value, culminating in a total derivatives value of ₹44,431 lakhs.

The surge in OI alongside robust volume suggests fresh positions are being established rather than existing ones being squared off. This pattern often indicates increased conviction among market participants, either in anticipation of a directional move or as a hedge against prevailing market risks.

Price Performance and Technical Context

Varun Beverages has been under pressure, falling for four consecutive sessions and delivering a cumulative loss of 6.12% over this period. On 4 Feb, the stock declined by 2.15%, underperforming its beverages sector by 1.19%. The intraday low touched ₹438.05, with the weighted average price skewed towards the lower end of the day’s range, indicating selling dominance.

Technically, the stock is trading below all major moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — underscoring a bearish trend. This technical weakness, combined with the open interest surge, points to increased bearish positioning or protective strategies by investors.

Investor Participation and Liquidity

Investor engagement has intensified, as evidenced by the delivery volume on 3 Feb reaching 1.08 crore shares, a remarkable 192.95% increase over the five-day average. This heightened participation suggests that long-term investors may be adjusting their holdings amid the recent price weakness.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹10.01 crores comfortably. This ensures that the observed derivatives activity is supported by a liquid underlying market, reducing the risk of price distortions due to illiquidity.

Market Positioning and Directional Bets

The increase in open interest amid a falling stock price typically signals that traders are either initiating fresh short positions or buying put options to hedge existing long exposure. Given the substantial notional value in options, it is plausible that market participants are favouring protective puts or outright bearish bets.

Varun Beverages’ Mojo Score currently stands at 44.0, with a Mojo Grade of Sell, downgraded from Hold on 3 Feb 2026. This downgrade reflects deteriorating fundamentals or technical outlook, reinforcing the bearish sentiment observed in the derivatives market.

Moreover, the company’s market cap remains substantial at ₹1,49,551.54 crores, categorising it as a large-cap stock. Despite its size, the stock’s recent underperformance relative to the sector and Sensex (which gained 0.11% on the same day) highlights company-specific challenges or profit-taking pressures.

Implications for Investors

For investors, the current derivatives activity suggests caution. The rising open interest and volume, coupled with a declining price and negative technical signals, indicate that downside risks may persist in the near term. Investors holding Varun Beverages should closely monitor the evolving open interest patterns, especially in options, to gauge shifts in market sentiment.

Those considering fresh exposure might prefer to wait for signs of a technical reversal or fundamental improvement before committing capital. Conversely, traders with a bearish outlook may find the current environment conducive for short-term strategies, given the clear directional bias in the derivatives market.

Broader Sector and Market Context

The beverages sector, in which Varun Beverages operates, has shown mixed performance recently. While the sector declined by 0.74% on 4 Feb, it outperformed Varun Beverages, indicating that the stock’s weakness is more pronounced than its peers. This divergence may be attributed to company-specific factors such as earnings concerns, supply chain issues, or competitive pressures.

Investors should also consider the broader macroeconomic environment, including inflationary pressures and consumer spending trends, which can impact discretionary consumption stocks like Varun Beverages. The current derivatives positioning may be reflecting these uncertainties, with market participants hedging against potential adverse developments.

Conclusion

The recent surge in open interest for Varun Beverages Ltd’s derivatives, combined with declining prices and increased investor participation, paints a picture of growing bearish sentiment and cautious positioning. The downgrade in Mojo Grade to Sell further corroborates the negative outlook.

Market participants should remain vigilant, analysing ongoing derivatives activity and price action to identify potential inflection points. While the current environment favours defensive or bearish strategies, any signs of fundamental recovery or technical support could prompt a reassessment of the stock’s prospects.

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