Open Interest and Volume Dynamics
On 23 Jan 2026, Tata Steel Ltd’s open interest (OI) in derivatives rose sharply to 1,05,718 contracts, up 12.6% from the previous 93,887 contracts. This increase of 11,831 contracts indicates heightened market activity and growing interest in the stock’s future price movements. The accompanying volume stood at 1,00,583 contracts, reflecting robust trading activity that supports the OI expansion.
The futures value associated with Tata Steel’s derivatives reached ₹2,43,958.96 lakhs, while the options segment exhibited an extraordinary notional value of approximately ₹82,456.10 crores. The combined derivatives value totals ₹2,53,982.21 lakhs, underscoring the stock’s significant liquidity and investor focus in the derivatives market.
Price Performance and Technical Indicators
Tata Steel’s underlying share price hit a new 52-week high of ₹192.4 on the same day, outperforming its Ferrous Metals sector peers by 0.79%. The stock has recorded gains for three consecutive sessions, delivering a cumulative return of 3.46% over this period. This positive momentum 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 strong uptrend and sustained investor confidence.
Investor participation has also intensified, with delivery volumes on 22 Jan reaching 1.75 crore shares, a 24.35% increase compared to the five-day average delivery volume. This rise in delivery volume suggests genuine accumulation rather than speculative trading, reinforcing the bullish sentiment.
Market Positioning and Directional Bets
The surge in open interest alongside rising volumes and price appreciation points to increased long positioning by market participants. Traders appear to be betting on further upside potential, supported by Tata Steel’s improving fundamentals and sector tailwinds. The stock’s large-cap status, with a market capitalisation of ₹2,36,937.35 crore, adds to its appeal as a liquid and reliable investment option.
Notably, the company’s Mojo Score has improved to 84.0, earning a Strong Buy grade as of 1 Jan 2026, upgraded from a Buy rating. This upgrade reflects enhanced financial metrics, operational performance, and positive market outlook, which likely contribute to the increased derivatives activity and investor interest.
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Sector Context and Comparative Analysis
Within the Ferrous Metals sector, Tata Steel’s performance stands out positively. While the sector index declined by 0.23% on the day, Tata Steel managed a modest gain of 0.37%, reflecting relative strength. The broader Sensex also fell by 0.23%, highlighting Tata Steel’s resilience amid market headwinds.
The company’s liquidity profile supports sizeable trades, with the stock’s average five-day traded value enabling a comfortable trade size of ₹10.8 crore based on 2% of average volume. This liquidity is crucial for institutional investors and derivatives traders seeking to establish or unwind positions without significant market impact.
Implications for Investors and Traders
The rising open interest and volume in Tata Steel’s derivatives suggest that market participants are positioning for continued price appreciation. The combination of technical strength, improving fundamentals, and sector tailwinds creates a favourable environment for bullish bets. However, investors should remain mindful of potential volatility inherent in commodity-linked stocks and monitor global steel demand and raw material cost trends closely.
Given the stock’s upgraded Mojo Grade to Strong Buy and its large-cap stature, Tata Steel remains an attractive candidate for both medium- and long-term portfolios. Traders may consider leveraging derivatives to capitalise on anticipated upward moves while managing risk through appropriate hedging strategies.
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Outlook and Conclusion
Tata Steel Ltd’s recent surge in open interest and volume in the derivatives market, coupled with its strong price performance and upgraded fundamental ratings, signals a robust bullish sentiment among investors. The stock’s ability to outperform its sector and broader market indices while maintaining strong liquidity and delivery volumes reinforces its appeal as a core holding in the Ferrous Metals space.
While the steel industry faces cyclical challenges, Tata Steel’s strategic initiatives, operational efficiencies, and improving market conditions position it favourably for sustained growth. Investors and traders should continue to monitor open interest trends and volume patterns as key indicators of market positioning and potential directional moves.
In summary, Tata Steel’s derivatives market activity reflects growing confidence and a positive outlook, making it a compelling stock to watch in the coming months.
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