National Aluminium Sees Heavy Put Option Activity Amid Bearish Sentiment

Put Option Activity Highlights

On 8 January 2026, National Aluminium recorded the highest volume in put options contracts, with 2,027 contracts traded at the ₹340 strike price expiring on 27 January 2026. This surge in put option turnover amounted to ₹837.66 lakhs, reflecting significant investor interest in downside protection or speculative bearish bets. The open interest at this strike stands at 875 contracts, indicating sustained interest beyond the trading day.

The underlying stock price hovered around ₹340.30, very close to the ₹340 strike, suggesting that traders are positioning for potential downside or volatility near this key level. The weighted average price of traded options skewed towards the lower end of the day’s price range, reinforcing the bearish sentiment.

Price Performance and Market Context

National Aluminium underperformed its sector and the broader market on the day, declining by 3.30% compared to the Aluminium & Aluminium Products sector’s 2.66% fall and the Sensex’s marginal 0.17% dip. The stock touched an intraday low of ₹337.15, marking a 4.38% drop from the previous close. This decline followed a five-day consecutive gain streak, signalling a potential trend reversal or profit-taking phase.

Despite the recent weakness, the stock remains above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, indicating that the medium to long-term trend remains intact. However, the sharp intraday fall and heavy put option activity suggest that investors are increasingly cautious about near-term risks.

Investor participation has risen notably, with delivery volumes on 7 January reaching 1.04 crore shares, a 65.01% increase over the five-day average. This heightened activity underscores the stock’s liquidity and the growing interest from market participants, both retail and institutional.

Fundamental Strength Amidst Volatility

National Aluminium Company Ltd operates in the Non-Ferrous Metals industry and is classified as a mid-cap stock with a market capitalisation of ₹64,741 crore. The company recently received an upgrade from a Buy to a Strong Buy rating by MarketsMOJO on 11 November 2025, reflecting improved fundamentals and positive outlook. The Mojo Score stands at a robust 85.0, underscoring the stock’s quality and growth potential.

Despite the recent price weakness, the company’s fundamentals remain solid. The upgrade was driven by improved earnings visibility, favourable aluminium price trends, and operational efficiencies. The stock’s Market Cap Grade is 2, indicating a mid-cap status with reasonable liquidity and institutional interest.

Bearish Positioning and Hedging Implications

The heavy put option activity at the ₹340 strike price expiring in late January suggests that investors are either hedging existing long positions or speculating on a near-term correction. Given the stock’s recent rally and subsequent pullback, this behaviour is consistent with prudent risk management amid uncertain market conditions.

Put options provide investors with the right to sell shares at a predetermined price, offering downside protection if the stock price falls below the strike. The significant open interest and turnover in these contracts indicate that market participants are actively seeking to mitigate risk or capitalise on potential volatility.

Notably, the stock’s liquidity supports sizeable trades, with the average traded value over the past five days allowing for trade sizes up to ₹16.6 crore without significant market impact. This liquidity is crucial for options traders who require efficient execution and tight spreads.

Sector and Market Dynamics

The Aluminium & Aluminium Products sector has experienced a broad-based decline of 2.66% on the day, reflecting pressure from global commodity price fluctuations and macroeconomic concerns. National Aluminium’s underperformance relative to its sector by 2.13% highlights the stock-specific pressures, possibly linked to profit booking or technical resistance near current levels.

Meanwhile, the broader Sensex index showed resilience with only a marginal 0.17% decline, suggesting that the weakness in National Aluminium is more concentrated and not reflective of overall market sentiment.

Outlook and Investor Considerations

Investors should weigh the recent bearish signals from options activity against the company’s strong fundamentals and positive medium-term outlook. The stock’s position above key moving averages suggests underlying strength, but the near-term correction and increased put buying highlight caution.

For traders, the ₹340 strike price expiry on 27 January 2026 represents a critical level to monitor. A sustained move below this price could trigger further downside, while a rebound may alleviate bearish pressures. The elevated open interest in puts also implies potential volatility around the expiry date.

Given the stock’s liquidity and active options market, investors have the flexibility to implement hedging strategies or speculative trades tailored to their risk appetite. The recent upgrade to Strong Buy by MarketsMOJO further supports a constructive stance for long-term investors, provided they manage short-term volatility prudently.

Summary

National Aluminium Company Ltd is currently at the centre of heightened put option activity, reflecting a cautious market stance amid a short-term price correction. While the stock’s fundamentals and technical indicators remain favourable, the surge in bearish options positions signals increased risk awareness among investors. Monitoring the ₹340 strike price and expiry on 27 January 2026 will be key for assessing the stock’s near-term trajectory.

As the Non-Ferrous Metals sector navigates global commodity uncertainties, National Aluminium’s blend of strong fundamentals and active derivatives market makes it a focal point for both hedgers and speculators heading into the new year.

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