Eternal Ltd Sees Surge in Put Option Activity Amid Bearish Market Sentiment

Put Option Activity Highlights

On 20 January 2026, Eternal Ltd emerged as the most actively traded stock in the put options segment, with 3,014 contracts changing hands at the ₹270 strike price, expiring on 27 January 2026. The turnover for these put options reached ₹5.32 crores, underscoring robust investor interest in downside protection or speculative bearish bets. Open interest stood at 1,439 contracts, indicating a substantial build-up of positions ahead of expiry.

The underlying stock price at the time was ₹273.75, just marginally above the put strike price, suggesting that traders are positioning for a potential decline below this level. This activity is consistent with a cautious outlook, as market participants seek to hedge existing long exposures or capitalise on anticipated weakness.

Recent Price Performance and Technical Weakness

Eternal Ltd has been on a downward trajectory, losing 8.71% over the past three trading sessions. On 20 January, the stock declined by 2.03%, underperforming its sector by 1.9% and the broader Sensex by 1.53%. Intraday, the stock touched a low of ₹272.30, a 3.22% drop from the previous close, reflecting persistent selling pressure.

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 weakness is likely contributing to the increased put option interest as investors seek downside protection or speculate on further declines.

Investor Participation and Liquidity

Investor participation has notably risen, with delivery volumes on 19 January reaching 5.58 crore shares, a 107.83% increase compared to the five-day average. This surge in delivery volume indicates heightened investor activity and conviction in the stock’s near-term movement.

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting a trade size of approximately ₹33.05 crores based on 2% of the five-day average traded value. This liquidity facilitates active options trading and allows institutional players to execute hedging strategies efficiently.

Mojo Score and Analyst Ratings

Eternal Ltd currently holds a Mojo Score of 47.0, categorised as a 'Sell' grade, a downgrade from its previous 'Hold' rating on 23 October 2025. This downgrade reflects deteriorating fundamentals and technical outlook, signalling caution for investors. The company’s market capitalisation stands at a substantial ₹2,71,416 crores, placing it firmly in the large-cap category, yet the low Market Cap Grade of 1 suggests limited upside potential relative to its size.

Sector and Market Context

The E-Retail and E-Commerce sector has experienced mixed performance recently, with some stocks showing resilience while others face headwinds from regulatory scrutiny and competitive pressures. Eternal Ltd’s underperformance relative to its sector (-1.9% on the day) and the broader market (-2.03% versus Sensex’s -0.50%) highlights company-specific challenges that may be driving bearish sentiment.

Investors appear to be increasingly cautious, as evidenced by the rising put option volumes and open interest. The concentration of put contracts at the ₹270 strike price, close to the current market price, suggests a strategic hedging level or a key support zone that traders are watching closely.

Expiry Patterns and Implications

The expiry date of 27 January 2026 is just a week away, intensifying the focus on option positioning. The large number of put contracts traded and open interest accumulation indicate that market participants are either protecting long positions against further downside or speculating on a near-term correction. The expiry week often brings heightened volatility, and the current positioning could lead to increased price swings as traders adjust or unwind positions.

Given the stock’s technical weakness and recent price declines, the elevated put option activity may also reflect a broader market sentiment shift towards risk aversion in the E-Retail sector. Investors should monitor price action around the ₹270 level closely, as a breach could trigger further downside momentum.

Investor Takeaways and Outlook

For investors, the surge in put option activity at a strike price near the current market level is a clear signal of 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 positioning as an opportunity to capitalise on potential declines, especially given the stock’s technical breakdown and recent negative momentum.

However, it is important to balance this bearish sentiment with the company’s large market capitalisation and sector positioning, which may provide some resilience in the medium term. Monitoring upcoming earnings, sector developments, and broader market trends will be crucial in assessing whether the current pessimism is justified or overdone.

Conclusion

Eternal Ltd’s elevated put option volumes and open interest ahead of the 27 January expiry underscore a growing bearish sentiment and hedging activity among investors. The stock’s recent underperformance, technical weakness, and downgrade to a 'Sell' grade reinforce the cautious outlook. Market participants should closely watch price action around the ₹270 strike price and expiry dynamics, as these will likely dictate near-term volatility and directional bias.

As always, investors are advised to consider their risk tolerance and investment horizon carefully before making trading decisions in this volatile environment.

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