Zydus Lifesciences Sees Sharp Open Interest Surge Amid Mixed Market Signals

Open Interest and Volume Dynamics

The latest data reveals that open interest (OI) in Zydus Lifesciences Ltd’s derivatives increased from 23,796 contracts to 27,546, marking a net addition of 3,750 contracts or 15.76% on 10 Feb 2026. This rise in OI was accompanied by a futures volume of 18,894 contracts, indicating robust trading activity. The combined futures and options value stood at approximately ₹1,29,96.9 lakhs, with futures contributing ₹11,306.3 lakhs and options an overwhelming ₹14,991.5 crores, underscoring the stock’s liquidity and active participation in the derivatives market.

The underlying stock price closed at ₹904, having touched an intraday low of ₹903.75, down 2.13% on the day. This decline contrasts with the sector’s gain of 0.70% and the Sensex’s modest 0.32% rise, highlighting relative weakness in Zydus Lifesciences Ltd’s equity performance despite increased derivatives interest.

Market Positioning and Sentiment Shifts

The surge in open interest alongside a falling stock price suggests that fresh short positions may be accumulating, or that existing shorts are being reinforced. This is consistent with the company’s recent downgrade by MarketsMOJO from a Hold to a Sell rating on 1 Dec 2025, reflecting deteriorated fundamentals or negative outlook factors. The Mojo Score currently stands at 48.0, firmly in the Sell category, signalling caution among investors and analysts alike.

Further supporting this bearish tilt, the stock’s moving averages show a mixed technical picture. While the price remains above the 5-day and 20-day moving averages, it is still trading below the longer-term 50-day, 100-day, and 200-day averages. This pattern often indicates short-term resilience but longer-term weakness, which may be prompting traders to hedge or speculate on further downside through derivatives.

Investor participation in the cash segment has also risen notably. Delivery volume on 9 Feb surged to 4.9 lakh shares, a 68.58% increase over the five-day average, suggesting that some investors are either accumulating shares for the long term or covering shorts. However, the day’s price action and derivatives data imply that speculative activity is dominating, with directional bets likely skewed towards bearish outcomes.

Implications of Derivatives Activity on Directional Bets

The notable increase in open interest, particularly in futures contracts, often signals that traders are positioning for a significant move. Given the stock’s underperformance relative to its sector and the broader market, the directional bias appears to be bearish. This is further corroborated by the substantial options market value, which may include put buying or call writing strategies aimed at capitalising on expected downside or volatility.

However, the elevated delivery volumes and the stock’s ability to hold above short-term moving averages suggest that some investors may be anticipating a potential rebound or are using the current dip to accumulate shares at attractive valuations. This dichotomy between short-term technical support and longer-term bearish sentiment creates a volatile trading environment, where derivatives traders are likely exploiting both directions through complex strategies.

Valuation and Market Capitalisation Context

Zydus Lifesciences Ltd is classified as a mid-cap pharmaceutical and biotechnology company with a market capitalisation of approximately ₹92,629 crores. Despite its sizeable market presence, the company’s Mojo Grade has deteriorated to a Sell, down from Hold, reflecting concerns over earnings growth, competitive pressures, or regulatory challenges. The Market Cap Grade is rated 2, indicating moderate size but not among the largest or most liquid stocks in the sector.

Liquidity remains sufficient for sizeable trades, with the stock’s average traded value supporting trade sizes up to ₹1.73 crores based on 2% of the five-day average. This liquidity facilitates active derivatives trading and allows institutional investors to implement sizeable positions without excessive market impact.

Outlook and Investor Considerations

Investors should approach Zydus Lifesciences Ltd with caution given the mixed signals from derivatives and cash markets. The sharp rise in open interest amid a declining stock price suggests that bearish bets are gaining traction, potentially foreshadowing further downside or increased volatility. The downgrade to a Sell rating by MarketsMOJO reinforces this cautious stance.

Nonetheless, the stock’s resilience above short-term moving averages and rising delivery volumes indicate that some market participants see value at current levels. This may lead to intermittent rallies or consolidation phases, especially if upcoming earnings or regulatory announcements provide positive surprises.

For traders, the derivatives market offers opportunities to capitalise on volatility through options strategies or futures positions. However, given the stock’s mid-cap status and moderate liquidity, it is advisable to monitor position sizes carefully to avoid undue risk.

Summary

Zydus Lifesciences Ltd’s recent surge in open interest by 15.8% to 27,546 contracts, combined with a 2.7% underperformance relative to its sector, paints a picture of growing bearish sentiment tempered by pockets of investor interest. The stock’s downgrade to Sell and mixed technical indicators suggest a cautious outlook, with derivatives traders positioning for potential downside while some investors accumulate on dips. Market participants should weigh these factors carefully when considering exposure to this pharmaceutical mid-cap.

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