Tata Steel: Open interest surges 11.31 per cent

On Monday, the stock of Tata steel Limited has given a breakout of ID/NR4 pattern breakout on the daily chart and thereafter, surged sharply up to the level of Rs 699.90.   

Further, the stock has witnessed a robust volume of nearly double the 50-day average volume, indicating a strong buying interest by the market participants. The 50-day average volume was Rs 1.95 crore, while on Monday, the stock has witnessed a total volume of Rs 3.81 crore. 

The derivatives data is also suggesting a long build-up in the stock. On Monday, January series stock future of Tata steel was 42,51,700 addition of open interest, which is an 11.31 per cent addition in the open interest. It indicates that there is a long build-up in the market. January month’s current open interest is 4,18,43,800. For January expiry, the open interest wise put-call ratio (PCR) is at 1.08.   

For January series, the highest call open interest is at 700 strikes with 17,28,900 OI. On the put side, the highest put open interest is at 650 strikes with 25,50,000 OI. Today, the highest addition in the open interest was seen at 770 calls of January expiry with 11,74,700 OI while on the put side, 650 puts have seen the highest addition in the open interest with 25,50,000 OI.  

For January expiry, the total call open interest is 1,26,34,440 and the put open interest is 1,36,47,600. The current derivative data suggest that Max Pain is at 650 for the monthly expiry.  

Technically, the stock is trading above its short and long-term moving averages. These moving averages are exactly in the desired sequence, which suggests that the trend is strong. The leading indicator i.e. the 14-period daily RSI is currently quoting at 79.67 and it is in a rising mode.   

Going ahead, the 20-day EMA is likely to act as strong support for the stock, which is currently placed at Rs 622.50 level. On the upside, the zone of Rs 715-Rs 721 will be a major hurdle for the stock.  

On Monday, the stock of Tata Steel closed at Rs 693 per share, surged by 7.76 per cent. The stock opened at Rs 649 per share and hit an intraday high of Rs 699.90 and a low of Rs 646.45 per share on NSE.