Dr. Reddy's Laboratories arrives at its June 16 earnings release with the defining feature of this preview cycle now more pronounced than at any prior print: the short position has broken out to a new high, even as options traders continue to show almost no concern.
The most significant change since the last article is the scale of short accumulation. Shares short jumped from 19.6 million on June 8 to 22.2 million by June 11 — a 13% rise in a single week and a 63% increase over the past month. That is not incremental drift; it is a genuine acceleration. The ORTEX short score pulled back marginally to 58.0 from its intra-week peak of 58.8, but the score has now held above 56 for three consecutive weeks and remains the highest sustained reading of this entire cycle. Cost to borrow has also climbed, reaching 1.28% on June 11 — up 38% on the week and more than double where it stood a month ago. Borrow availability has loosened from the sub-33% lows of mid-May, recovering to 86% as of June 11, suggesting the lending pool is absorbing the new short demand rather than tightening against it. The borrow market is not yet under stress, but the combination of a surging position and rising costs points to genuine directional conviction among short sellers.
Options traders have not followed. The put/call ratio edged up to 0.20 — barely a tenth of a standard deviation above its 20-day mean of 0.18 — and sits toward the low end of its 52-week range. Call activity continues to dominate the options market by a wide margin. That divergence between short sellers and options participants is the central tension heading into Monday's print: one cohort has built its largest position of the year, the other is as relaxed as it has been at any point in this cycle.
The analyst picture is thin on fresh signals. HSBC upgraded RDY to Buy with a $16.90 target a year ago — the most recent action in the data — and broader coverage has been quiet since. The stock has gained roughly 7% over the past month to $13.30, and the price-to-earnings multiple has expanded modestly alongside it. Regulatory scrutiny around manufacturing compliance has been the persistent overhang cited in recent coverage, and that narrative has not resolved.
The June 16 print is therefore a direct test of whether the surge in short positioning reflects a well-founded view on near-term results — or whether the stock's recent recovery leaves that position vulnerable if the numbers hold up.
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