Eternal Ltd Sees Heavy Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights

On 23 January 2026, Eternal Ltd’s put options expiring on 27 January attracted substantial trading volumes, particularly at strike prices of ₹265, ₹270, and ₹260. The most active strike was ₹265, with 8,970 contracts traded, generating a turnover of approximately ₹600.36 lakhs and an open interest of 2,481 contracts. The ₹270 strike followed closely with 6,057 contracts traded and turnover near ₹589.0 lakhs, while the ₹260 strike saw 6,883 contracts traded with turnover of ₹263.72 lakhs and open interest of 1,586 contracts.

This concentration of put option activity around the ₹260-₹270 range, close to the underlying stock price of ₹267.25, suggests investors are positioning for potential downside or seeking protection against further declines. The elevated open interest at these strikes confirms sustained bearish interest rather than mere speculative trades.

Stock Performance and Technical Weakness

Eternal Ltd has underperformed its sector by 2.99% on the day, with the stock price falling 3.24% to close near ₹267.25. The stock has declined for two consecutive sessions, losing 5.27% over this period. Intraday lows touched ₹265.6, reflecting selling pressure near the lower end of recent trading ranges. Notably, the weighted average price of traded volumes skewed towards the day’s low, indicating stronger selling interest.

Technically, Eternal is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a bearish trend across multiple timeframes. This technical deterioration aligns with the surge in put option activity, as investors hedge or speculate on further downside.

Investor Participation and Liquidity

Investor participation has risen markedly, with delivery volumes on 22 January reaching 6.59 crore shares, a 65.96% increase over the five-day average. This heightened activity underscores growing market interest and possibly increased short-term positioning ahead of the expiry. The stock’s liquidity remains robust, with a trade size capacity of approximately ₹54.02 crore based on 2% of the five-day average traded value, facilitating active options and cash market trading.

Mojo Score and Analyst Ratings

Eternal Ltd currently holds a Mojo Score of 43.0, categorised as a Sell grade, a downgrade from its previous Hold rating on 23 October 2025. The downgrade reflects deteriorating fundamentals and technicals, consistent with the bearish options positioning. The company’s market capitalisation stands at a substantial ₹2,62,972 crore, placing it firmly in the large-cap segment, yet the low Market Cap Grade of 1 indicates limited upside potential relative to peers.

Expiry Patterns and Investor Strategy

The expiry date of 27 January 2026 is approaching rapidly, and the clustering of put option volumes near the current price suggests investors are either hedging existing long positions or speculating on a near-term correction. The strike prices of ₹260, ₹265, and ₹270 are critical levels to watch, as open interest at these points may influence price support or resistance in the coming sessions.

Given the stock’s recent underperformance relative to the sector (which gained 0.33% on the day) and the broader Sensex’s marginal 0.03% rise, Eternal’s bearish positioning stands out. This divergence may indicate company-specific concerns or sector rotation away from E-Retail/ E-Commerce names with weaker momentum.

Implications for Investors

For investors, the heavy put option activity signals caution. Those holding long positions in Eternal Ltd may consider protective strategies such as buying puts or tightening stop-loss levels to mitigate downside risk. Conversely, traders with a bearish outlook might view the current option volumes as confirmation of a potential near-term decline, possibly targeting the ₹260 strike as a support level.

It is also important to monitor the stock’s price action in relation to its moving averages and delivery volumes, as sustained weakness below key technical levels could accelerate selling pressure. The elevated open interest in puts suggests that any rebound may be met with resistance from option sellers or hedgers.

Sector Context and Market Outlook

The E-Retail/ E-Commerce sector has experienced mixed performance recently, with some names showing resilience while others face headwinds from valuation concerns and shifting consumer trends. Eternal Ltd’s downgrade and bearish positioning may reflect company-specific challenges such as margin pressures or competitive dynamics. Investors should weigh these factors alongside broader sector trends when making allocation decisions.

Conclusion

Eternal Ltd’s pronounced put option activity ahead of the 27 January expiry underscores a growing bearish sentiment among market participants. The clustering of contracts near the current price, combined with technical weakness and a recent downgrade to Sell, suggests investors are bracing for further downside or seeking protection. While liquidity and investor participation remain strong, caution is warranted given the stock’s underperformance relative to its sector and the broader market. Monitoring option open interest and price action in the coming days will be crucial for gauging the stock’s near-term trajectory.

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