NMDC Ltd Sees Sharp Open Interest Surge Amidst Prolonged Price Decline

Open Interest and Volume Dynamics

The latest data reveals that NMDC’s open interest (OI) in futures and options contracts rose sharply from 83,073 to 97,137 contracts, an increase of 14,064 contracts or 16.93% on 22 Jan 2026. This surge in OI was accompanied by a futures volume of 51,759 contracts, indicating robust trading activity. The combined futures and options value stood at approximately ₹17,27,53 lakhs, underscoring the substantial capital flow in the derivatives market for this mid-cap stock.

Interestingly, while the derivatives market activity intensified, the underlying stock price declined by 2.13% on the same day, closing near its intraday low of ₹76.09. This price movement marks the sixth consecutive day of losses, cumulatively eroding 8.79% of the stock’s value over this period. The divergence between rising open interest and falling prices suggests that market participants may be positioning for further downside or hedging existing exposures.

Market Positioning and Sentiment

The increase in open interest amid falling prices typically indicates fresh short positions or the addition to existing shorts, reflecting bearish sentiment. However, it can also imply that buyers are entering the market with protective strategies, such as buying puts or selling calls, to hedge against volatility. The futures value of ₹1,71,168 lakhs and options value exceeding ₹10,506 crores highlight the scale of speculative and hedging activity.

NMDC’s Mojo Score of 70.0 and an upgraded Mojo Grade to ‘Buy’ from ‘Hold’ as of 1 Dec 2025 suggest that fundamental analysts see value in the stock despite recent price weakness. The stock’s high dividend yield of 4.22% at current prices further supports its appeal to income-focused investors, even as short-term technical indicators remain subdued.

Technical and Liquidity Considerations

From a technical standpoint, NMDC’s price remains above its 200-day moving average, a long-term bullish indicator, but below its 5-day, 20-day, 50-day, and 100-day moving averages, signalling short- to medium-term weakness. The falling delivery volume, down 9.72% against the 5-day average to 85.6 lakh shares, points to reduced investor participation in the cash market, potentially shifting focus to derivatives for trading opportunities.

Liquidity remains adequate, with the stock’s average traded value supporting trade sizes up to ₹3.26 crore based on 2% of the 5-day average traded value. This ensures that institutional and retail investors can execute sizeable trades without significant market impact.

Implications for Investors and Traders

The pronounced rise in open interest alongside declining prices suggests that traders are actively positioning for potential volatility or a continuation of the downtrend. For investors, this signals caution, as the derivatives market often leads price discovery and reflects collective market expectations.

Given NMDC’s mid-cap status with a market capitalisation of ₹67,468.41 crore, the stock remains a significant component of the Minerals & Mining sector. Its recent underperformance relative to the sector (-0.62% today) and the broader Sensex (-0.77%) highlights sector-specific or company-specific challenges that may be influencing sentiment.

However, the upgrade in Mojo Grade to ‘Buy’ and a solid Mojo Score of 70.0 indicate that the company’s fundamentals remain intact, potentially offering a value opportunity for long-term investors willing to weather short-term volatility.

Derivatives Market as a Barometer

The derivatives market activity in NMDC provides valuable insights into market psychology. The 16.9% increase in open interest is a clear sign of fresh capital entering the market, either through new short positions or protective hedges. The substantial options value, exceeding ₹10,506 crore, suggests that option traders are actively managing risk or speculating on directional moves.

Such activity often precedes significant price movements, as increased open interest can amplify volatility when positions are unwound or rolled over. Traders should monitor changes in put-call ratios, strike price concentrations, and expiry dates to better understand the evolving market consensus.

Outlook and Strategic Considerations

For investors and traders alike, the current scenario in NMDC demands a nuanced approach. The stock’s fundamental strength, reflected in its dividend yield and upgraded Mojo Grade, contrasts with near-term technical weakness and rising bearish positioning in derivatives.

Market participants should closely monitor upcoming quarterly results, commodity price trends, and sectoral developments that could influence NMDC’s earnings and valuation. Additionally, tracking open interest changes in key strike prices and expiry cycles will provide clues on market expectations and potential price targets.

Risk management remains paramount, especially given the stock’s recent six-day losing streak and the potential for increased volatility as derivatives positions adjust. Investors with a longer horizon may view current levels as an entry point, while traders might capitalise on short-term directional moves informed by derivatives market signals.

Conclusion

The sharp increase in open interest in NMDC Ltd’s derivatives market amid a sustained price decline highlights a complex interplay of market forces. While the stock faces short-term headwinds, its fundamental attributes and upgraded rating suggest underlying value. The derivatives activity serves as a critical barometer of market sentiment, signalling heightened positioning and potential volatility ahead. Investors and traders should remain vigilant, leveraging comprehensive research and technical analysis to navigate this evolving landscape.

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