National Aluminium Company Ltd Sees Sharp Open Interest Surge Amid Volatile Trading

Open Interest and Volume Dynamics

On 30 Jan, National Aluminium’s open interest (OI) in derivatives rose by 3,517 contracts, a 12.24% increase from the previous day’s 28,733 to 32,250 contracts. This notable expansion in OI accompanied a total volume of 53,846 contracts, reflecting robust participation in both futures and options segments. The futures value traded stood at ₹1,72,568 lakhs, while options turnover was substantially higher at ₹65,256 crore, culminating in a combined derivatives turnover of approximately ₹1,94,916 lakhs.

The rise in OI alongside elevated volume typically indicates fresh positions being established rather than existing ones being squared off. This suggests that traders are actively repositioning themselves, possibly anticipating significant price movements in the near term.

Price Action and Volatility Context

Despite the surge in derivatives activity, National Aluminium’s spot price underperformed, falling 7.80% on the day to close near ₹386, after touching an intraday low of ₹386, marking a steep 9.99% drop from the previous close. The stock opened with a gap down of 3.49%, signalling immediate bearish sentiment at market open. Notably, the weighted average price indicated that most volume traded closer to the day’s low, underscoring selling pressure throughout the session.

Intraday volatility was elevated at 5.17%, reflecting sharp price swings. This heightened volatility, combined with increased OI, points to a market grappling with uncertainty and divergent views on the stock’s near-term direction.

Technical and Trend Analysis

Interestingly, National Aluminium continues to trade above its key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — suggesting that the longer-term trend remains intact despite the recent pullback. However, the stock’s six-day winning streak was broken, indicating a potential short-term trend reversal or consolidation phase.

The sector context adds further nuance: the Aluminium & Aluminium Products sector declined by 5.99% on the same day, with National Aluminium underperforming the sector by 1.75%. This relative weakness amid a sector downturn may reflect company-specific concerns or profit-taking by investors after recent gains.

Investor Participation and Liquidity

Delivery volumes surged to 1.15 crore shares on 29 Jan, a 93.63% increase over the five-day average, signalling rising investor interest in holding the stock beyond intraday trades. This heightened delivery volume often indicates stronger conviction among participants, either on the buy or sell side.

Liquidity remains ample, with the stock’s average traded value supporting trade sizes up to ₹19.21 crore without significant market impact. This ensures that institutional and retail investors can execute sizeable trades efficiently, which may be contributing to the increased open interest and volume.

Market Positioning and Directional Bets

The sharp increase in open interest amid falling prices suggests that market participants are actively taking new short positions or hedging existing long exposure. The combination of rising OI and declining prices is often interpreted as a bearish signal, indicating that traders expect further downside or are protecting profits.

However, the sustained trading above key moving averages and the strong delivery volumes imply that some investors may be accumulating at lower levels, anticipating a rebound or longer-term strength. This dichotomy points to a battle between short-term bears and longer-term bulls, creating a volatile trading environment.

Options market data, with an options value turnover exceeding ₹65,256 crore, indicates significant activity in calls and puts, which may reflect complex strategies such as spreads or straddles designed to capitalise on expected volatility rather than outright directional bets.

Fundamental and Rating Update

National Aluminium Company Ltd, a mid-cap player in the Non-Ferrous Metals industry with a market capitalisation of ₹72,813 crore, has recently seen its Mojo Grade upgraded from Buy to Strong Buy on 11 Nov 2025, with a robust Mojo Score of 84.0. This upgrade reflects improved fundamentals, positive earnings outlook, and favourable sector dynamics.

Despite the recent price weakness, the strong rating suggests that the stock remains attractive for investors with a medium to long-term horizon, especially given its leadership position in the aluminium sector and improving operational metrics.

Sector and Broader Market Context

The broader Sensex declined marginally by 0.50% on the day, indicating that National Aluminium’s underperformance is largely sector-driven rather than market-wide. The Non-Ferrous Metals sector, particularly aluminium producers, has faced pressure due to global commodity price fluctuations and concerns over demand growth.

Investors should monitor global aluminium prices, input cost trends, and domestic demand indicators closely, as these factors will heavily influence National Aluminium’s near-term performance and derivatives market activity.

Investor Takeaway

The recent surge in open interest in National Aluminium’s derivatives market, coupled with elevated volatility and a sharp price correction, highlights a period of heightened uncertainty and repositioning. While short-term traders appear to be betting on further downside, longer-term investors may view the dip as a buying opportunity given the stock’s strong technical positioning and upgraded fundamental rating.

Careful monitoring of open interest trends, volume patterns, and sector developments will be crucial for investors seeking to navigate this volatile phase. The stock’s liquidity and active derivatives market provide ample opportunities for both hedging and speculative strategies, but caution is warranted given the mixed signals.

Overall, National Aluminium remains a key stock to watch within the Non-Ferrous Metals sector, with its recent open interest surge signalling that market participants are bracing for significant moves ahead.

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