Open Interest and Volume Dynamics
The latest data shows open interest (OI) in Zydus Lifesciences futures and options contracts rising from 15,128 to 17,751 contracts, an increase of 2,623 contracts or 17.34% on 26 Feb 2026. This surge accompanies a daily volume of 22,735 contracts, indicating robust trading activity. The futures segment alone accounted for a value of approximately ₹22,289 lakhs, while options contracts contributed an enormous ₹17,518.76 crores in notional value, culminating in a total derivatives value of ₹25,795.55 lakhs.
Such a pronounced increase in OI alongside elevated volumes often suggests fresh capital entering the market, with participants either initiating new positions or rolling over existing ones. This contrasts with mere position squaring, which typically sees OI decline despite high volumes.
Price Performance and Technical Context
On the price front, Zydus Lifesciences outperformed its Pharmaceuticals & Biotechnology sector by 0.78% on the day, registering a 0.94% gain compared to the sector’s 0.14% and the Sensex’s marginal decline of 0.10%. The stock has been on a two-day winning streak, delivering a cumulative return of 2.66%. Intraday, it touched a high of ₹947.55, up 3.03% from the previous close, signalling short-term bullish momentum.
Technically, the stock trades above its 5-day, 20-day, and 50-day moving averages, indicating positive short- to medium-term momentum. However, it remains below the 100-day and 200-day moving averages, suggesting that longer-term trends are still under pressure. This mixed technical picture may be contributing to the cautious yet active positioning seen in the derivatives market.
Investor Participation and Liquidity
Investor engagement has notably increased, with delivery volumes on 25 Feb rising to 3.51 lakh shares, a 104.92% jump over the five-day average. This surge in delivery volume reflects genuine investor interest rather than speculative intraday trading. Liquidity remains adequate, with the stock supporting trade sizes of up to ₹0.97 crore based on 2% of the five-day average traded value, making it accessible for institutional and retail participants alike.
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Market Positioning and Directional Bets
The sharp rise in open interest, coupled with rising volumes, suggests that market participants are actively repositioning ahead of potential catalysts. Given the stock’s recent outperformance and technical setup, a portion of the increased OI likely represents bullish bets, possibly through long futures or call options. However, the substantial notional value in options also indicates that some investors may be hedging or speculating on volatility, reflecting uncertainty about near-term direction.
Zydus Lifesciences’ Mojo Score currently stands at 48.0, with a Mojo Grade of Sell, downgraded from Hold as of 1 Dec 2025. This rating reflects cautious sentiment based on fundamental and technical factors. The company’s market capitalisation is ₹93,600 crore, placing it firmly in the mid-cap segment, which often experiences heightened volatility and active derivatives trading.
Sectoral and Broader Market Context
The Pharmaceuticals & Biotechnology sector has been relatively stable, with the sector index posting a modest 0.14% gain on the day. Zydus Lifesciences’ outperformance by 0.78% suggests selective strength within the sector. However, the broader market, represented by the Sensex, declined by 0.10%, indicating some risk-off sentiment among investors.
This divergence may be driving increased derivatives activity as traders seek to capitalise on sector-specific opportunities while managing broader market risks. The mixed technical signals and recent downgrade in Mojo Grade further reinforce the notion that investors are balancing optimism with caution.
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Implications for Investors
For investors, the surge in open interest and volume in Zydus Lifesciences derivatives signals an active market environment with increased liquidity and potential trading opportunities. The stock’s recent gains and technical positioning suggest a cautiously optimistic outlook, but the downgrade to a Sell grade and the stock’s position below longer-term moving averages warrant prudence.
Investors should closely monitor upcoming corporate developments, sectoral trends, and broader market conditions. The derivatives market activity may presage increased volatility, offering both risk and reward for nimble traders. Long-term investors might consider the current valuation and fundamental outlook before increasing exposure.
Conclusion
Zydus Lifesciences Ltd’s notable open interest increase of 17.3% in derivatives contracts, combined with rising volumes and a modest price uptick, reflects a market in flux. While short-term momentum appears positive, mixed technical signals and a recent downgrade in Mojo Grade counsel caution. The active positioning in futures and options suggests that investors are hedging bets and preparing for potential volatility in this mid-cap pharmaceutical stock. As always, a balanced approach considering both fundamental and technical factors will serve investors best in navigating this evolving landscape.
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