SRF Ltd Falls 5.13%: 5 Key Factors Driving the Bearish Momentum

16 February: Downgrade to Sell Reflects Emerging Concerns

SRF Ltd opened the week at Rs.2,848.40, gaining 0.54% on the day, slightly underperforming the Sensex’s 0.70% rise. However, the key development was the downgrade by MarketsMOJO from Hold to Sell on 16 February 2026. This decision was driven by a reassessment of the company’s technical indicators and valuation metrics despite strong fundamentals such as a high ROCE of 17.09% and robust profit growth of 88.57% in the latest six months.

The downgrade highlighted concerns over elevated valuation multiples, including an EV/CE ratio of 5.1, and a shift in technical momentum from sideways to mildly bearish. The stock’s technical indicators such as MACD and moving averages showed bearish tendencies, signalling potential near-term weakness. This downgrade set the tone for the week’s cautious market sentiment.

17-18 February: Heavy Put Option Activity and Technical Weakness Intensify Bearish Outlook

On 17 February, the stock dropped sharply by 3.69% to Rs.2,743.20, with volume surging to 17,712 shares. This decline coincided with a spike in put option trading at the ₹2,700 strike price, with 2,607 contracts traded on 17 and 18 February, representing a turnover of approximately ₹20.3 crores. The open interest at this strike stood at 969 contracts, signalling significant bearish positioning ahead of the 24 February expiry.

On 18 February, SRF’s price further declined by 0.45% to Rs.2,730.95 amid a massive volume of 3,58,221 shares, reflecting heightened investor activity. The stock underperformed its specialty chemicals sector by 0.98% and the Sensex by 0.43%. Technical indicators deteriorated further, with the stock trading below all key moving averages and showing bearish MACD and Bollinger Band signals. Delivery volumes increased by 63.7% compared to the five-day average, indicating active repositioning by investors.

19 February: Open Interest Surges Amid Mixed Technical Signals

SRF Ltd saw a sharp 12.95% increase in open interest in its derivatives segment on 18 February, rising from 35,488 to 40,082 contracts. This surge accompanied a trading volume of 51,283 contracts and a notional futures value of approximately ₹86,263 lakhs, with options contributing ₹19,494 crore. The stock price closed at Rs.2,679.05 on 19 February, down 1.90%, continuing its underperformance relative to the Sensex’s 1.45% decline.

Technical momentum showed signs of transition on 19 February, shifting from bearish to mildly bearish. The MACD remained bearish on the weekly chart but mildly bearish monthly, while the RSI showed no clear signal. Bollinger Bands and moving averages continued to indicate downward pressure, though the Know Sure Thing (KST) indicator was bullish monthly, suggesting some longer-term stabilisation. Delivery volumes remained elevated, up 58.89% over the five-day average, reflecting sustained investor interest despite the downtrend.

20 February: Week Closes with Modest Recovery but Overall Downtrend Persists

On the final trading day of the week, SRF Ltd closed at Rs.2,687.95, up 0.33% from the previous close, while the Sensex gained 0.41%. This slight uptick followed a week marked by consistent selling pressure and technical challenges. Despite the minor recovery, the stock ended the week down 5.13% from Rs.2,833.15, significantly underperforming the Sensex’s 0.39% gain.

The week’s price action and technical indicators underscore a cautious market stance. The stock remains below key moving averages and faces elevated put option activity, signalling persistent bearish sentiment. Investors are advised to monitor the stock’s ability to hold support levels, particularly around the ₹2,700 strike price, which has emerged as a critical threshold in the options market.

Daily Price Comparison: SRF Ltd vs Sensex (16-20 February 2026)

Key Takeaways

Positive Signals: Despite the week’s decline, SRF Ltd maintains strong fundamentals with robust profit growth and operational efficiency. The stock’s long-term returns remain impressive, with five-year gains exceeding 140% and a ten-year return surpassing 1,100%. Some technical indicators on monthly charts suggest potential stabilisation, offering cautious optimism for longer-term investors.

Cautionary Signals: The downgrade to a Sell rating reflects growing concerns over valuation and technical momentum. Elevated put option activity and a sharp rise in open interest highlight bearish market positioning. The stock’s consistent underperformance relative to the Sensex and sector, combined with trading below key moving averages, signals near-term downside risks. Investors should be wary of the critical ₹2,700 support level, which is pivotal for upcoming option expiry dynamics.

Conclusion

SRF Ltd’s week was characterised by a clear shift towards bearish sentiment, driven by technical deterioration, valuation concerns, and active bearish positioning in the derivatives market. While the company’s strong fundamentals and historical performance provide a solid foundation, the current market environment suggests caution. The stock’s underperformance relative to the Sensex and the surge in put option activity underscore the challenges ahead in the short term.

Investors should closely monitor technical signals and option market developments, particularly as the 24 February expiry approaches. The mixed momentum indicators and elevated volumes imply that the stock is at a critical juncture, with potential for either further downside or a stabilisation phase. A balanced approach considering both fundamental strength and technical caution is advisable in navigating SRF Ltd’s evolving market landscape.

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