Eternal Ltd Sees Sharp Open Interest Surge Amidst Prolonged Downtrend

Open Interest and Volume Dynamics

On 24 Feb 2026, Eternal Ltd's open interest (OI) in derivatives rose sharply to 1,72,729 contracts from the previous 1,53,296, marking an increase of 19,433 contracts or 12.68%. This rise in OI was accompanied by a substantial volume of 1,31,802 contracts traded, indicating heightened activity and fresh positions being established in the futures and options market.

The futures segment alone accounted for a value of approximately ₹2,07,025 lakhs, while the options segment's notional value was an astronomical ₹64,700.79 crores, culminating in a total derivatives value of ₹2,20,659 lakhs. Such elevated figures underscore the intense speculative and hedging interest surrounding Eternal Ltd's stock.

Price Performance Amidst Rising Derivative Activity

Despite the surge in derivatives activity, Eternal Ltd's share price has been under considerable pressure. The stock has declined for six consecutive sessions, losing 11.81% over this period. On 24 Feb, it opened with a gap down of 2.99%, further extending losses to touch an intraday low of ₹252.55, down 5.76% from the previous close. The weighted average price for the day was closer to this low, suggesting that most trading volume was concentrated near the day's bottom.

Moreover, Eternal is trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — signalling a sustained bearish trend. This underperformance is also evident relative to its sector, with the E-Retail/ E-Commerce segment falling by 4.66% on the day, while the broader IT-Software sector declined 4.57% and the Sensex dropped 1.35%.

Investor Participation and Liquidity Considerations

Investor participation has notably increased, with delivery volume on 23 Feb rising by 63.39% to 2.39 crore shares compared to the five-day average. This surge in delivery volume suggests that long-term investors are either accumulating or liquidating positions amid the volatile price action. The stock's liquidity remains robust, with an average traded value sufficient to support trade sizes up to ₹17.28 crores, ensuring that institutional and retail investors can transact without significant market impact.

Market Positioning and Potential Directional Bets

The sharp increase in open interest amid a falling stock price typically indicates that new short positions are being added, or that existing shorts are being reinforced. This is consistent with the stock’s six-day losing streak and the gap-down opening on 24 Feb. Traders may be betting on further downside, expecting the bearish momentum to continue in the near term.

However, the rising delivery volumes suggest that some investors might be accumulating shares at lower levels, possibly anticipating a reversal or a value entry point. This dichotomy between derivative market bearishness and spot market accumulation creates a nuanced scenario where short-term traders and long-term investors are diverging in their outlooks.

Given Eternal Ltd’s current Mojo Score of 31.0 and a downgrade from Hold to Sell on 23 Oct 2025, the market sentiment remains cautious. The company’s Market Cap Grade stands at 1, reflecting its large-cap status but also signalling limited upside potential under current conditions. The downgrade and low Mojo Grade reinforce the view that the stock is under pressure fundamentally and technically.

Sector and Broader Market Context

The E-Retail/ E-Commerce sector has been volatile, with many constituents facing headwinds from regulatory changes, competitive pressures, and shifting consumer behaviour. Eternal Ltd’s underperformance relative to its sector and the broader IT-Software index highlights company-specific challenges that may be weighing on investor confidence.

Furthermore, the broader market’s modest decline on the day suggests that Eternal’s weakness is more idiosyncratic than systemic. This could imply that the derivatives market is pricing in company-specific risks or near-term earnings concerns, which investors should monitor closely.

Implications for Investors and Traders

For investors, the current environment suggests caution. The sustained downtrend, combined with the Mojo Grade downgrade and weak technicals, points to limited near-term upside. The surge in open interest and volume in derivatives indicates that market participants are positioning for continued volatility, likely skewed towards bearish bets.

Traders may find opportunities in short-term directional plays, particularly on the downside, but should remain vigilant for any signs of reversal, especially if delivery volumes continue to rise. Monitoring changes in open interest alongside price action will be critical to gauge whether the market is preparing for a sustained decline or a potential bottoming process.

Long-term investors should consider the fundamental outlook and sector dynamics before increasing exposure, as the current sentiment and technical indicators do not favour a strong rebound in the immediate future.

Conclusion

Eternal Ltd’s recent surge in open interest amidst a persistent price decline highlights a complex interplay of market forces. While derivatives data points to increased bearish positioning, rising delivery volumes suggest some underlying investor interest at lower levels. The company’s downgrade to a Sell rating and weak technicals reinforce a cautious stance. Investors and traders alike should closely monitor evolving volume and open interest patterns, alongside broader sector trends, to navigate this challenging market environment effectively.

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