Open Interest and Volume Dynamics
On 20 Feb 2026, Tata Steel’s open interest (OI) in futures and options contracts climbed sharply from 89,657 to 99,061, marking an increase of 9,404 contracts or 10.49%. This rise in OI was supported by a daily volume of 81,012 contracts, indicating active trading interest. The futures segment alone accounted for a value of approximately ₹2,37,011 lakhs, while the options segment’s notional value was substantially higher at ₹69,471,418,665 lakhs, underscoring the extensive derivatives activity around the stock.
The total combined derivatives value stood at ₹2,43,805.82 lakhs, reflecting significant liquidity and investor engagement. Such a surge in open interest, coupled with strong volume, typically suggests fresh positions being initiated rather than existing ones being squared off, pointing to a directional conviction among market participants.
Price Performance and Technical Context
Tata Steel’s underlying share price closed at ₹208, just 1.46% shy of its 52-week high of ₹211.39. The stock outperformed its sector benchmark by 0.48% on the day, delivering a 1.48% gain compared to the Ferrous Metals sector’s 1.04% and the broader Sensex’s 0.42% rise. Notably, Tata Steel is trading above all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – signalling a sustained bullish trend and strong technical momentum.
However, despite the price strength, investor participation in terms of delivery volume has slightly declined. The delivery volume on 19 Feb was 1.05 crore shares, down 6.11% against the five-day average, suggesting that while short-term trading activity is high, longer-term holding interest may be moderating.
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Market Positioning and Directional Bets
The sharp increase in open interest alongside rising prices suggests that traders are positioning for further upside in Tata Steel’s shares. The 10.49% jump in OI, combined with the stock’s outperformance relative to its sector and the Sensex, indicates a bullish sentiment prevailing among derivatives traders. This is further corroborated by the stock’s Mojo Score of 75.0 and a current Mojo Grade of Buy, which was recently downgraded from Strong Buy on 1 Jan 2026, reflecting a slight moderation but still a positive outlook.
Market participants appear to be building fresh long positions, possibly anticipating continued strength driven by favourable industry dynamics such as steel demand recovery, stable raw material costs, and improving global trade conditions. The large market capitalisation of ₹2,60,206.64 crore and the stock’s liquidity, capable of supporting trade sizes up to ₹12.06 crore based on 2% of the five-day average traded value, make it an attractive option for institutional and retail investors alike.
Sectoral and Broader Market Context
Within the Ferrous Metals sector, Tata Steel’s performance stands out as it outpaces the sector’s 1.04% daily return. The sector itself has been buoyed by improving infrastructure spending and government initiatives supporting steel production and consumption. Tata Steel’s ability to maintain a position above all major moving averages further strengthens its technical case relative to peers.
Nonetheless, the slight decline in delivery volumes signals some caution among long-term investors, possibly due to profit-booking or rotation into other sectors. This mixed participation highlights the importance of monitoring volume trends alongside price and open interest to gauge the sustainability of the current rally.
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Implications for Investors
For investors, the surge in open interest and accompanying volume patterns in Tata Steel’s derivatives market provide valuable insights into market sentiment and potential price trajectories. The data suggests that traders are increasingly confident in the stock’s near-term prospects, positioning for further gains. However, the slight dip in delivery volumes warrants a cautious approach, as it may indicate some profit-taking or reduced conviction among long-term holders.
Given the stock’s strong technical positioning above all key moving averages and its proximity to a 52-week high, investors may consider Tata Steel as a favourable candidate for accumulation, especially within a diversified portfolio focused on the ferrous metals sector. The Mojo Grade of Buy and a solid Mojo Score of 75.0 reinforce this positive stance, although the recent downgrade from Strong Buy suggests monitoring for any emerging risks or sectoral headwinds.
Outlook and Conclusion
Tata Steel Ltd’s recent open interest surge in derivatives, combined with robust volume and price strength, signals a bullish market positioning that could drive further upside in the near term. The stock’s large-cap status, liquidity, and favourable technical indicators make it a compelling option for investors seeking exposure to the ferrous metals sector’s recovery.
While the slight decline in delivery volumes introduces a note of caution, the overall market sentiment remains constructive. Investors should continue to monitor open interest trends, volume patterns, and price action closely to capitalise on emerging opportunities while managing risk effectively.
In summary, Tata Steel’s derivatives market activity reflects growing optimism and directional bets favouring an upward trajectory, supported by strong fundamentals and sector tailwinds.
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