Zydus Lifesciences Sees Sharp Open Interest Surge Amid Bearish Market Signals

Open Interest and Volume Dynamics

On 10 Feb 2026, Zydus Lifesciences (symbol: ZYDUSLIFE) recorded an open interest (OI) of 31,375 contracts in its derivatives, marking a substantial increase of 7,579 contracts or 31.85% compared to the previous day’s OI of 23,796. This sharp rise in OI is accompanied by a total volume of 57,194 contracts traded, indicating heightened market activity and investor interest in the stock’s futures and options.

The futures segment alone accounted for a value of approximately ₹40,104.5 lakhs, while the options segment’s notional value stood at an extraordinary ₹44,045.4 crores, culminating in a combined derivatives turnover of ₹45,148.2 lakhs. Such elevated figures underscore the growing speculative and hedging interest in Zydus Lifesciences amid recent price volatility.

Price Performance and Technical Context

Despite the surge in derivatives activity, the underlying equity has struggled, closing at ₹887, down 3.69% on the day and touching an intraday low of ₹886.05, a 4.05% drop from the previous close. This underperformance is stark when compared to the Pharmaceuticals & Biotechnology sector’s marginal decline of 0.06% and the Sensex’s modest gain of 0.21% on the same day.

Technically, Zydus Lifesciences is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. The weighted average price of traded volumes skewed towards the lower end of the day’s range, reflecting selling pressure and bearish sentiment among market participants.

Investor Participation and Liquidity

Investor engagement has intensified, with delivery volumes on 9 Feb rising to 4.9 lakh shares, a 68.58% increase over the five-day average delivery volume. This suggests that despite the price decline, investors are actively participating, possibly repositioning their holdings or responding to the evolving market outlook.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹1.73 crore based on 2% of the five-day average traded value. This level of liquidity facilitates efficient price discovery and allows institutional players to manoeuvre without excessive market impact.

Market Positioning and Directional Bets

The pronounced increase in open interest alongside declining prices typically indicates that new short positions are being established or existing shorts are being augmented. This is consistent with the stock’s downgrade in mojo grade from Hold to Sell on 1 Dec 2025, reflecting deteriorating fundamentals or negative market sentiment.

Given the mojo score of 48.0 and a market cap grade of 2, Zydus Lifesciences is positioned as a mid-cap stock with moderate risk factors. The downgrade suggests that analysts and investors are increasingly cautious, possibly anticipating further downside or volatility in the near term.

Options market data, with an outsized notional value, hints at complex strategies being employed, including protective puts or bearish spreads. The surge in open interest may also reflect hedging activity by institutional investors seeking to mitigate downside risks amid sectoral headwinds or company-specific concerns.

Sector and Benchmark Comparison

While the Pharmaceuticals & Biotechnology sector remains relatively stable, Zydus Lifesciences’ underperformance by nearly 3.77% relative to its peers signals company-specific challenges. This divergence warrants close monitoring, especially as the stock trades below all major moving averages, a technical red flag for momentum investors.

In contrast, the Sensex’s modest gain of 0.21% on the day highlights the stock’s relative weakness within the broader market context, underscoring the importance of stock-specific factors driving the derivatives activity and price action.

Implications for Investors

For investors, the current derivatives market activity in Zydus Lifesciences signals caution. The surge in open interest amid falling prices suggests that bearish bets are gaining traction, potentially foreshadowing further downside or increased volatility. Investors should carefully assess their exposure, considering the stock’s technical weakness and recent downgrade.

Those with a bullish outlook may want to await signs of a reversal, such as stabilisation above key moving averages or a reduction in open interest, before increasing positions. Conversely, traders inclined to capitalise on momentum might explore short-selling opportunities or protective option strategies to hedge downside risk.

Given the stock’s mid-cap status and liquidity profile, institutional investors can execute sizeable trades without significant market impact, but retail investors should remain vigilant to price swings and volume spikes.

Outlook and Conclusion

Zydus Lifesciences is currently navigating a challenging phase marked by a sharp increase in derivatives open interest, bearish price action, and a downgrade in mojo grade. The confluence of these factors points to a cautious market stance, with participants positioning for potential further declines or volatility in the near term.

While the broader Pharmaceuticals & Biotechnology sector remains relatively stable, Zydus Lifesciences’ divergence underscores the importance of company-specific developments and technical signals in shaping investor behaviour. Monitoring open interest trends, volume patterns, and price movements will be critical for gauging future directional momentum and making informed investment decisions.

Upgrade at special rates, valid only for the next few days. Claim Your Special Rate →