Steel Authority Of India Ltd Sees Sharp Open Interest Surge Amid Mixed Market Signals

Open Interest and Volume Dynamics

On 29 Dec 2025, SAIL's open interest (OI) in derivatives rose sharply to 68,906 contracts from the previous 57,871, marking an increase of 11,035 contracts or 19.07%. This surge is accompanied by a total traded volume of 97,987 contracts, indicating heightened activity and interest among traders. The futures segment alone accounted for a value of approximately ₹1,45,067 lakhs, while options contributed a staggering ₹49,877.7 crores, culminating in a combined derivatives value exceeding ₹1,53,926 lakhs.

The underlying stock price closed at ₹133, having touched an intraday high of ₹138.8, a 4.9% rise, signalling bullish momentum. Notably, the stock has gained for two consecutive days, delivering a cumulative return of 1.08% during this period. This price action aligns with the increased open interest, suggesting fresh positions are being established rather than existing ones being squared off.

Market Positioning and Directional Bets

The sharp rise in open interest alongside rising prices typically indicates that new long positions are being built, reflecting bullish sentiment among market participants. Given that SAIL's price is trading above its 5-day, 20-day, 100-day, and 200-day moving averages but remains below the 50-day average, the technical setup points to a cautiously optimistic outlook. Traders appear to be positioning for a potential upward breakout, though the resistance near the 50-day moving average remains a key hurdle.

However, delivery volumes have declined significantly, with a 47.83% drop against the 5-day average delivery volume, suggesting that while speculative interest is rising, actual investor participation in the cash segment is waning. This divergence often indicates that short-term traders and derivatives players are driving the recent activity rather than long-term investors.

Sector and Market Context

SAIL operates within the ferrous metals industry, a sector that has shown mixed performance recently. The stock's 1-day return of 0.54% is slightly below the sector's 0.60% gain but outperforms the Sensex, which declined by 0.41% on the same day. This relative strength underscores SAIL's appeal amid broader market volatility.

With a market capitalisation of ₹56,939 crores, SAIL is classified as a mid-cap stock with a Market Cap Grade of 2. Its recent upgrade from a Sell to a Hold rating by MarketsMOJO on 23 Dec 2025, reflected in a Mojo Score of 58.0, indicates improving fundamentals and a more balanced risk-reward profile. The Mojo Grade upgrade suggests that while the stock is not yet a strong buy, it is gaining favour among analysts and may warrant closer attention.

Implications for Traders and Investors

The surge in open interest and volume in SAIL's derivatives market suggests that traders are increasingly confident about the stock's near-term prospects. The combination of rising prices and expanding open interest is a classic indicator of fresh buying interest, which could propel the stock higher if sustained.

However, the decline in delivery volumes signals caution, as it implies that long-term investor conviction has not yet fully returned. This dynamic may lead to increased volatility, with speculative traders driving price swings. Investors should monitor the stock's ability to break above the 50-day moving average, which would confirm a more robust uptrend.

Liquidity remains adequate, with the stock supporting trade sizes of up to ₹3.99 crores based on 2% of the 5-day average traded value, making it accessible for institutional and retail participants alike.

Technical and Fundamental Outlook

From a technical perspective, SAIL's price action and moving average positioning suggest a consolidation phase with a bullish bias. The recent upgrade in Mojo Grade from Sell to Hold reflects improving financial metrics and sectoral tailwinds. While the Mojo Score of 58.0 indicates moderate strength, investors should watch for further upgrades or downgrades as new data emerges.

Fundamentally, the ferrous metals sector faces challenges such as fluctuating raw material costs and global demand uncertainties. Nonetheless, SAIL's market cap and operational scale provide resilience. The stock's performance relative to the Sensex and sector peers indicates it is currently viewed as a stable mid-cap option within the space.

Conclusion

The recent spike in open interest and volume in Steel Authority Of India Ltd.'s derivatives market signals a shift in market sentiment towards a more bullish stance. While price gains and technical indicators support this view, the decline in delivery volumes advises caution, highlighting the speculative nature of current activity. Investors should closely monitor price action around key moving averages and sector developments to gauge the sustainability of this momentum.

With a Hold rating and improving Mojo Grade, SAIL presents a balanced risk-reward profile for mid-cap investors seeking exposure to the ferrous metals sector. However, given the availability of potentially better alternatives across sectors and market caps, portfolio diversification and active monitoring remain prudent strategies.

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