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 31,670 contracts, up sharply from the previous 23,796 contracts, marking an increase of 7,874 contracts or 33.09%. This rise in OI was accompanied by a total volume of 61,051 contracts traded, indicating robust participation in the derivatives market. The futures segment alone accounted for a value of approximately ₹43,146 lakhs, while the options segment's notional value was substantially higher at ₹46,951 crores, culminating in a combined derivatives turnover of ₹48,512 lakhs.

The underlying stock price closed at ₹889, having touched an intraday low of ₹885.25, down 4.14% on the day. Notably, the weighted average price of traded contracts skewed closer to the day's low, suggesting that the bulk of trading activity occurred at depressed price levels. This price action, coupled with rising OI, often points to fresh short positions or hedging activity rather than outright bullish bets.

Market Positioning and Technical Context

Zydus Lifesciences is currently trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained downtrend. The stock’s 1-day return of -4.06% starkly contrasts with the Pharmaceuticals & Biotechnology sector’s marginal decline of -0.11% and the Sensex’s modest gain of 0.16%, underscoring relative weakness.

Investor participation has notably increased, with delivery volumes on 09 Feb rising by 68.58% to 4.9 lakh shares compared to the 5-day average. This surge in delivery volume indicates that investors are either accumulating or liquidating sizeable positions in the cash market, which often precedes or coincides with derivative market activity.

Liquidity remains adequate for sizeable trades, with the stock’s traded value comfortably supporting transactions up to ₹1.73 crore based on 2% of the 5-day average traded value. This liquidity profile facilitates active participation by institutional players and sophisticated traders.

Interpreting the Open Interest Surge

The 33.1% increase in open interest alongside a declining stock price suggests that market participants are likely building bearish positions. In derivatives parlance, rising OI with falling prices typically indicates fresh short selling or put buying, both of which are bearish directional bets. Conversely, if OI rises with rising prices, it would imply fresh long positions.

Given that the weighted average traded price clustered near the day’s low, it is plausible that traders are aggressively shorting the stock or purchasing protective puts to hedge existing long exposures. The substantial notional value in options further supports the view that options strategies, such as protective puts or bearish spreads, are being employed.

Mojo Score and Analyst Ratings

Zydus Lifesciences currently holds a Mojo Score of 48.0, categorised as a 'Sell' rating, downgraded from 'Hold' on 01 Dec 2025. This downgrade reflects deteriorating fundamentals or technical outlook as assessed by MarketsMOJO’s proprietary scoring system. The company’s market capitalisation stands at ₹90,953 crore, placing it in the mid-cap segment with a Market Cap Grade of 2, indicating moderate size but not among the largest pharma players.

The downgrade and bearish technical signals align with the observed derivatives market activity, reinforcing the notion that investors are positioning for further downside or volatility in the near term.

Sector and Broader Market Context

The Pharmaceuticals & Biotechnology sector has been relatively stable, with a minor 0.11% decline on the day, while the Sensex gained 0.16%. Zydus Lifesciences’ underperformance by nearly 4% against its sector peers highlights company-specific challenges or negative sentiment. This divergence often attracts speculative interest in derivatives as traders seek to capitalise on expected volatility or directional moves.

Investors should also note that the stock’s trading below all major moving averages signals a lack of near-term support, increasing the likelihood of further downside unless a catalyst emerges to reverse the trend.

Investor Takeaways and Outlook

For investors and traders, the sharp rise in open interest combined with weakening price action and a downgrade in Mojo Grade suggests caution. The derivatives market activity points to increased bearish sentiment, possibly anticipating further price erosion or heightened volatility.

Long-term investors should monitor whether the stock can reclaim key moving averages and stabilise delivery volumes before considering fresh exposure. Meanwhile, traders might explore short-term strategies aligned with the prevailing downtrend, such as short futures or put options, while managing risk carefully.

Given the stock’s liquidity profile and active derivatives market, Zydus Lifesciences remains a focal point for market participants seeking to capitalise on sector-specific developments or company news. However, the current technical and sentiment indicators favour a cautious stance.

Summary

Zydus Lifesciences Ltd’s derivatives market has experienced a notable surge in open interest by over 33%, coinciding with a 4% decline in the stock price and a downgrade to a 'Sell' rating. The data suggests increased bearish positioning, supported by technical weakness and rising delivery volumes. Investors should weigh these signals carefully against sector trends and broader market conditions before adjusting their portfolios.

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