Steel Authority Of India Ltd Sees Sharp Open Interest Surge Amid Positive Momentum

Open Interest and Volume Dynamics

On 29 Dec 2025, SAIL's open interest (OI) in derivatives rose sharply by 11,898 contracts, a 20.56% increase from the previous figure of 57,871 to 69,769. This notable expansion in OI was accompanied by a robust volume of 1,06,851 contracts, underscoring active participation from traders and institutional investors alike. The futures value stood at ₹1,59,641.82 lakhs, while the options segment exhibited an enormous notional value of ₹54,137.37 crores, culminating in a total derivatives value of approximately ₹1,69,098.29 lakhs.

This surge in open interest, coupled with elevated volumes, typically indicates fresh positions being established rather than existing ones being squared off. Market participants appear to be positioning themselves for a directional move, with the underlying stock price providing further clues.

Price Performance and Technical Positioning

SAIL's underlying price closed at ₹134, having touched an intraday high of ₹138.8, marking a 4.9% rally on the day. The stock has gained 1.92% over the last two consecutive sessions, outperforming the ferrous metals sector by 0.89% and the Sensex, which declined by 0.41%. This relative strength is further supported by the stock trading above all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained bullish trend.

Despite the positive price momentum, delivery volumes have declined sharply, with a 47.83% drop against the 5-day average, indicating that short-term traders and derivatives players may be driving the recent activity rather than long-term investors. 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, ensuring smooth execution for institutional orders.

Market Positioning and Sentiment Analysis

The sharp increase in open interest alongside rising prices suggests that traders are predominantly taking bullish positions on SAIL. The 20.56% jump in OI is a strong indication of fresh long bets, as the stock's momentum aligns with positive market sentiment in the ferrous metals sector. This is further corroborated by the stock’s Mojo Score of 58.0 and an upgraded Mojo Grade from Sell to Hold as of 23 Dec 2025, reflecting improving fundamentals and technical outlook.

However, the market cap grade remains modest at 2, consistent with SAIL’s mid-cap status and the inherent volatility in the ferrous metals industry. Investors should note that while the stock has outperformed recently, the sector remains sensitive to global commodity cycles, steel demand fluctuations, and regulatory developments.

Comparative Performance and Sector Context

SAIL’s 1-day return of 1.38% surpasses the ferrous metals sector’s 0.67% gain, highlighting its relative strength. The broader Sensex’s decline of 0.41% on the same day emphasises the stock’s resilience amid wider market pressures. This outperformance is significant given the recent volatility in steel prices and raw material costs, which have challenged many peers.

Investors should also consider the falling delivery volumes, which may imply that the recent rally is driven more by speculative interest rather than sustained institutional accumulation. This dynamic warrants caution, as a reversal in sentiment could trigger profit-taking and increased volatility.

Implications for Investors and Traders

The current surge in open interest and volume in SAIL’s derivatives market suggests that traders are positioning for a continuation of the recent upward trend. The stock’s technical strength, combined with improving Mojo ratings, supports a cautiously optimistic outlook. However, the decline in delivery volumes and mid-cap market cap grade indicate that investors should remain vigilant for potential volatility and sector-specific risks.

For long-term investors, the upgrade from Sell to Hold signals a stabilising fundamental picture, but the stock’s exposure to cyclical steel demand and commodity price swings means that a diversified approach remains prudent. Traders may look to capitalise on the momentum through futures and options strategies, but should monitor open interest and volume patterns closely for signs of exhaustion or reversal.

Outlook and Conclusion

Steel Authority Of India Ltd. is currently exhibiting signs of renewed market interest, as evidenced by the sharp rise in open interest and strong price performance. The stock’s ability to outperform its sector and the broader market amid mixed macroeconomic signals is encouraging. Nevertheless, the mixed signals from delivery volumes and market cap grading suggest that investors should balance optimism with caution.

Overall, the derivatives market activity points to a bullish bias, but the evolving market conditions in the ferrous metals sector warrant close monitoring. Investors and traders alike should keep an eye on upcoming steel demand data, global commodity trends, and policy developments that could influence SAIL’s trajectory in the near term.

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