Eternal Ltd Sees Significant Open Interest Surge Amid Bearish Momentum

Open Interest and Volume Dynamics

On 23 Feb 2026, Eternal Ltd’s open interest (OI) in derivatives rose sharply to 177,860 contracts from the previous 159,411, marking an increase of 18,449 contracts or 11.57%. This rise in OI was accompanied by a futures volume of 110,677 contracts, reflecting active trading interest. The futures value stood at ₹2,77,399.48 lakhs, while the options segment exhibited an enormous notional value of approximately ₹4,60,498.85 crores, underscoring the stock’s prominence in the derivatives market.

Despite this surge in derivatives activity, the underlying stock price remained subdued at ₹266, continuing its five-day losing streak with a cumulative decline of 7.0%. The stock’s one-day return was -1.06%, slightly outperforming the sector’s fall of -1.34%, though lagging behind the Sensex’s modest gain of 0.33% on the same day.

Bearish Price Action Amid Rising Open Interest

The persistent decline in Eternal Ltd’s share price, trading below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicates sustained bearish sentiment. The falling investor participation is evident from the delivery volume, which dropped by 33.41% to 1.22 crore shares on 20 Feb compared to the five-day average, signalling reduced conviction among long-term holders.

Interestingly, the increase in open interest alongside falling prices typically points to fresh short positions being initiated or existing shorts being added. This suggests that market participants are positioning for further downside or hedging existing exposures amid uncertain sectoral conditions.

Market Positioning and Directional Bets

The derivatives data reveals that traders are actively engaging in both futures and options contracts, with the total derivatives value crossing ₹2,82,276.23 lakhs. The substantial options notional value indicates that investors may be employing complex strategies such as protective puts or bearish spreads to manage risk or speculate on further declines.

Given Eternal Ltd’s Mojo Score of 31.0 and a recent downgrade from Hold to Sell on 23 Oct 2025, the market’s cautious stance is justified. The company’s market cap remains large at ₹2,57,278.35 crores, but the low Market Cap Grade of 1 and deteriorating momentum metrics reflect challenges in regaining investor confidence.

Sector and Market Context

The E-Retail and E-Commerce sector has been under pressure recently, with many stocks experiencing volatility amid shifting consumer trends and macroeconomic uncertainties. Eternal Ltd’s performance today was broadly in line with its sector peers, which declined by 1.34%. However, the Sensex’s positive return of 0.33% highlights a divergence between broader market optimism and sector-specific challenges.

Liquidity remains adequate for Eternal Ltd, with the stock’s trading volumes supporting a trade size of approximately ₹16.37 crores based on 2% of the five-day average traded value. This liquidity facilitates active participation by institutional and retail investors alike, especially in the derivatives market where positioning changes are more pronounced.

Implications for Investors

The combination of rising open interest and falling prices typically signals that new short positions are being established, or that bearish sentiment is intensifying. For investors, this suggests caution in initiating fresh long positions without clear signs of a reversal. The stock’s sustained trading below all major moving averages further reinforces the downtrend.

However, the large derivatives notional values also imply that sophisticated market participants may be using options strategies to hedge or speculate, which could lead to increased volatility in the near term. Monitoring changes in put-call ratios and strike-wise open interest could provide additional insights into market expectations.

Outlook and Conclusion

In summary, Eternal Ltd’s recent surge in open interest amid a declining price trend highlights a market increasingly positioned for further downside or hedging activity. The downgrade to a Sell rating by MarketsMOJO and the low Mojo Score of 31.0 reflect fundamental and technical weaknesses that investors should weigh carefully.

While the stock remains a large-cap heavyweight in the E-Retail sector, the current market environment suggests that investors may benefit from a cautious approach, favouring risk management and selective exposure. Close monitoring of derivatives activity and price action will be crucial to identify any potential shifts in market sentiment or emerging opportunities.

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