Avenue Supermarts Ltd Sees Sharp Open Interest Surge Amid Bearish Market Signals

Open Interest and Volume Dynamics

The latest data reveals that Avenue Supermarts’ open interest rose from 52,404 contracts to 57,878, an absolute increase of 5,474 contracts. This 10.45% jump in OI is accompanied by a futures volume of 34,773 contracts, indicating robust trading activity in the derivatives market. The combined futures and options value stands at approximately ₹37,397.48 lakhs, with futures contributing ₹34,426.89 lakhs and options an overwhelming ₹16,296.85 crores, underscoring the significant liquidity and interest in the stock’s derivatives.

The underlying stock price closed at ₹3,666, having touched an intraday low of ₹3,635.3, down 2.27% on the day. This decline outpaced the sector’s 1.29% fall and the Sensex’s marginal 0.16% drop, signalling relative weakness in Avenue Supermarts’ equity performance.

Market Positioning and Sentiment

The surge in open interest amid a falling stock price often suggests that new short positions are being established or that existing shorts are being augmented. This is consistent with Avenue Supermarts’ recent downgrade by MarketsMOJO from a Hold to a Sell rating on 31 October 2025, reflecting deteriorating fundamentals and a Mojo Score of 38.0. The company’s Market Cap Grade remains at 1, indicating limited upside potential relative to its large-cap peers.

Further technical analysis reveals that Avenue Supermarts is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — reinforcing the bearish technical setup. Additionally, delivery volumes have contracted sharply, with a 41.42% decline in delivery volume to 1.74 lakh shares on 2 January compared to the 5-day average, signalling waning investor participation in the cash market.

Implications of Rising Open Interest

The 10.45% increase in open interest, coupled with a declining stock price, typically indicates that bearish bets are being placed aggressively. Traders may be initiating fresh short positions or buying put options to hedge against further downside. The substantial options value relative to futures suggests that option strategies, such as protective puts or bearish spreads, are gaining traction.

Given Avenue Supermarts’ large market capitalisation of ₹2,38,038 crore and its status as a diversified retail leader, such positioning changes are noteworthy. The stock’s liquidity, with a tradable size of approximately ₹3.43 crore based on 2% of the 5-day average traded value, supports active participation by institutional and retail traders alike.

Sector and Broader Market Context

While Avenue Supermarts has underperformed its sector by 0.26% today, the diversified retail sector itself is facing headwinds amid cautious consumer spending and inflationary pressures. The Sensex’s modest decline of 0.16% contrasts with the sharper moves in Avenue Supermarts, highlighting stock-specific factors at play.

Investors should note that the downgrade from Hold to Sell by MarketsMOJO on 31 October 2025 reflects concerns over valuation and growth prospects. The Mojo Grade deterioration signals a need for caution, especially given the stock’s technical weakness and falling delivery volumes.

Outlook and Investor Considerations

Given the current market positioning, investors should approach Avenue Supermarts with caution. The rising open interest amid price weakness suggests that the market consensus is skewed towards further downside or at best, consolidation at lower levels. The stock’s failure to hold above key moving averages and the sharp drop in delivery volumes indicate reduced conviction among long-term holders.

However, the company’s dominant position in the diversified retail sector and large-cap status mean that any fundamental improvements or positive sectoral developments could quickly alter sentiment. Monitoring open interest trends alongside price action will be crucial to gauge shifts in market positioning.

For traders, the elevated options activity offers opportunities to deploy strategic option plays, such as buying puts for downside protection or selling calls to generate premium income in a range-bound scenario. Long-term investors may prefer to wait for a confirmed technical turnaround and improvement in delivery volumes before increasing exposure.

Summary

Avenue Supermarts Ltd’s derivatives market activity reveals a significant 10.45% increase in open interest, signalling heightened bearish positioning amid a weakening stock price. The downgrade to a Sell rating by MarketsMOJO and the stock’s technical underperformance reinforce a cautious outlook. While liquidity remains adequate for active trading, falling delivery volumes and broad market headwinds suggest investors should remain vigilant. Strategic use of options and close monitoring of open interest trends will be key to navigating this evolving market landscape.

Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year (MRP = Rs. 34,999) Start Today