National Aluminium Company Ltd Sees Sharp Open Interest Surge Amid Price Volatility

Open Interest and Volume Dynamics

On 1 Feb 2026, NATIONALUM's open interest (OI) in futures and options contracts rose markedly by 4,354 contracts, a 13.15% increase from the previous day's 33,116 contracts to 37,470. This rise in OI was accompanied by a robust trading volume of 54,467 contracts, indicating strong participation from market participants. The futures value stood at ₹1,12,929 lakhs, while the options segment exhibited an enormous notional value of approximately ₹65,196.58 crores, culminating in a total derivatives value of ₹1,38,264 lakhs.

The surge in open interest amid elevated volumes typically reflects fresh positions being established rather than existing ones being squared off. This pattern often precedes significant price movements, as traders position themselves for anticipated volatility or directional shifts.

Price Action and Market Sentiment

Despite the increased derivatives activity, NATIONALUM's underlying equity price underperformed sharply. The stock opened with a gap down of 8.42%, trading as low as ₹329.4 intraday, a 14.54% drop from the previous close. The weighted average price for the day skewed closer to the lower end of the trading range, signalling selling pressure. Over the past two sessions, the stock has declined by 16.94%, underperforming its sector, Aluminium & Aluminium Products, which fell by 5.13%, and the broader Sensex, which marginally gained 0.19% on the same day.

Interestingly, the stock price remains above its 50-day, 100-day, and 200-day moving averages but below the short-term 5-day and 20-day averages. This technical setup suggests a short-term bearish trend within a longer-term uptrend, often a sign of profit booking or correction phases.

Investor Participation and Liquidity

Investor engagement has intensified, with delivery volumes on 30 Jan rising by 93% to 1.45 crore shares compared to the five-day average. This spike in delivery volume indicates that investors are not merely trading intraday but are also taking or giving delivery, reflecting conviction in their positions. The stock's liquidity remains adequate, with a trade size capacity of ₹24.2 crores based on 2% of the five-day average traded value, facilitating sizeable transactions without significant market impact.

Directional Bets and Market Positioning

The simultaneous rise in open interest and volume, coupled with a declining stock price, suggests that market participants are actively taking short positions or hedging existing long exposures. The 13.15% increase in OI indicates fresh contracts being written, likely reflecting bearish sentiment or protective strategies amid recent price weakness.

Given the stock's recent two-day fall of nearly 17%, traders may be positioning for further downside or volatility. The wide intraday range of ₹35.05 and the weighted average price leaning towards the lows reinforce the presence of selling pressure. However, the stock's position above longer-term moving averages may attract value buyers or long-term investors seeking to capitalise on the dip.

Mojo Score Upgrade and Analyst Outlook

National Aluminium Company Ltd currently holds a robust Mojo Score of 80.0, reflecting strong fundamentals and positive market sentiment. The Mojo Grade was recently upgraded from Buy to Strong Buy on 11 Nov 2025, signalling improved confidence from analysts and market observers. Despite the recent price weakness, this upgrade underscores the company's solid financial health and growth prospects within the non-ferrous metals sector.

With a market capitalisation of ₹64,659 crores, NATIONALUM is classified as a mid-cap stock, offering a blend of growth potential and relative stability. The sector's recent underperformance, with Aluminium & Aluminium Products down 5.13%, contrasts with the stock's sharper decline, suggesting company-specific factors or profit-taking may be influencing price action.

Implications for Investors

For investors and traders, the surge in derivatives open interest combined with the stock's recent price weakness presents a nuanced picture. The increased OI and volume suggest that market participants are actively positioning for potential volatility or a directional move, likely to the downside in the near term. This environment calls for cautious trading, with attention to risk management and stop-loss strategies.

Long-term investors may view the current dip as an opportunity to accumulate shares, given the company's strong fundamentals and recent Mojo Grade upgrade. However, short-term traders should monitor open interest trends and volume patterns closely, as these can provide early signals of trend reversals or continuation.

Additionally, the rising delivery volumes indicate genuine investor interest beyond speculative trading, which could support price stability if buying interest sustains.

Sector and Broader Market Context

The non-ferrous metals sector, particularly aluminium producers, has faced headwinds recently due to global commodity price fluctuations and demand uncertainties. NATIONALUM's sharper decline relative to its sector peers may reflect company-specific challenges or profit-taking after recent gains. The broader market's modest positive return on the day (+0.19% Sensex) highlights the stock's relative weakness.

Investors should also consider macroeconomic factors such as raw material costs, export demand, and government policies impacting the aluminium industry when assessing NATIONALUM's outlook.

Conclusion

National Aluminium Company Ltd's recent surge in open interest and trading volumes amid a falling stock price signals active repositioning by market participants, likely reflecting bearish sentiment or hedging activity. While the stock faces short-term pressure, its strong fundamentals and recent analyst upgrade provide a counterbalance for long-term investors. Careful monitoring of derivatives activity and price trends will be essential for navigating this volatile phase in NATIONALUM's market journey.

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