Info Edge Sees Sharp Open Interest Surge Amid Weak Price Action and Bearish Positioning

Open Interest and Volume Dynamics

The latest data reveals that open interest (OI) in Info Edge’s futures and options contracts rose from 54,322 to 61,953 contracts, an absolute increase of 7,631 contracts. This 14.05% jump in OI is accompanied by a futures volume of 30,280 contracts, indicating active participation in the derivatives market. The total futures value stands at approximately ₹69,731 lakhs, while the options segment commands a staggering ₹5,627 crores in notional value, underscoring the stock’s prominence in the derivatives space.

Despite this surge in OI, the underlying stock price has been under pressure, declining by 1.36% on the day and underperforming its sector by 0.68%. Over the past three consecutive sessions, Info Edge has lost 4.28% in value, reflecting sustained selling pressure. The weighted average price of traded volumes has been closer to the day’s low, signalling that sellers have dominated intraday price action.

Technical Indicators and Market Sentiment

Technically, Info Edge is trading below all key moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – indicating a bearish trend across multiple timeframes. The stock’s delivery volume on 19 Feb was 6.31 lakh shares, which is 42.6% lower than the five-day average delivery volume, suggesting waning investor participation in the cash market. This divergence between rising derivatives activity and falling delivery volumes often points to speculative positioning rather than genuine accumulation.

The stock’s market capitalisation stands at ₹70,088 crores, categorising it as a mid-cap entity within the E-Retail/E-Commerce sector. The sector itself has shown modest gains of 0.56% on the day, while the broader Sensex index advanced by 0.42%, highlighting Info Edge’s relative weakness amid a generally positive market backdrop.

Interpreting the Surge in Open Interest

The 14.05% increase in open interest amid falling prices typically indicates that fresh short positions are being added, or that existing shorts are being rolled over and expanded. This is consistent with the stock’s recent downtrend and the fact that it has breached its previous 52-week lows. Traders may be positioning for further downside, anticipating continued weakness in the E-Retail sector or company-specific headwinds.

Alternatively, some market participants could be establishing hedges or protective puts, given the sizeable options notional value. However, the dominance of futures volume relative to options suggests directional bets are more prevalent than purely hedging strategies.

Mojo Score and Analyst Ratings

Info Edge’s current Mojo Score stands at 43.0, reflecting a Sell rating, which was downgraded from Hold on 1 Jul 2025. The downgrade aligns with the deteriorating technical and fundamental outlook, as well as the stock’s underperformance relative to its sector and the broader market. The market cap grade of 2 further indicates moderate liquidity and mid-cap status, which may limit institutional interest during volatile phases.

Given the stock’s technical weakness, falling investor participation, and rising open interest on the short side, investors should exercise caution. The risk-reward profile appears skewed towards further downside, especially if sectoral headwinds persist or if earnings disappoint.

Liquidity and Trading Considerations

Liquidity remains adequate for sizeable trades, with the stock’s average traded value supporting transactions up to ₹4.6 crores based on 2% of the five-day average traded value. This ensures that institutional investors can enter or exit positions without excessive market impact, although the recent decline in delivery volumes signals reduced conviction among long-term holders.

Traders should monitor the evolution of open interest and volume patterns closely. A sustained increase in OI accompanied by stabilising or rising prices could signal a reversal or short covering. Conversely, continued OI growth with falling prices would reinforce bearish sentiment and potential for further declines.

Sectoral and Broader Market Context

The E-Retail/E-Commerce sector has been under pressure due to a combination of macroeconomic factors, including tightening consumer spending and rising input costs. Info Edge, as a key player in this space, is not immune to these challenges. Its recent price action and derivatives activity reflect market concerns about growth sustainability and margin pressures.

In contrast, the broader Sensex has shown resilience, gaining 0.42% on the day, highlighting a divergence between sector-specific weakness and overall market strength. This divergence may attract selective investors seeking value in beaten-down mid-caps, but the current technical and sentiment indicators caution against aggressive accumulation.

Outlook and Investor Takeaways

Investors should closely monitor open interest trends and price action in Info Edge. The current surge in OI amid falling prices suggests that bearish bets are intensifying, and the stock may face further downside pressure in the near term. The downgrade to a Sell rating and the low Mojo Score reinforce this cautious stance.

However, should the stock find support and witness a contraction in open interest alongside rising prices, it could signal a potential turnaround. Until then, risk-averse investors may prefer to explore alternative mid-cap opportunities within the sector or broader market that demonstrate stronger fundamentals and momentum.

Summary

Info Edge (India) Ltd’s derivatives market activity reveals a notable increase in open interest by 14.05%, coinciding with a fresh 52-week low in the underlying stock price. The combination of rising OI, declining prices, and subdued delivery volumes points to growing bearish sentiment and speculative short positioning. Technical indicators remain weak, and the stock’s Mojo Grade has been downgraded to Sell, reflecting deteriorating fundamentals and market outlook. Investors should exercise caution and consider alternative opportunities until a clear reversal signal emerges.

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