ITC has been trailing the benchmark indices since peaking in September 2024, with technical weakness compounded by investor concerns over proposed GST 2.0 sin tax reforms.
Shares of ITC edged higher on Tuesday after touching Monday’s low of ₹405, as selling pressure gripped the stock amid weak consumption trends and speculation around higher tobacco taxation.
SEBI-registered analysts Deepak Pal and Pradeep Carpenter noted that ITC’s short-term chart pattern remains weak as the stock trades below its 20-, 50-, 100- and 200-day moving averages.
They both observed bearish momentum indicators from the relative strength index (RSI) and moving average convergence divergence (MACD). Support was expected near ₹400–₹390 with a better opportunity for accumulation near ₹360–₹365.
Technical Outlook
Pal said ITC is showing strong selling pressure, with RSI readings around 36 approaching the oversold zone and a continuing negative MACD crossover.
He pegged immediate resistance at ₹415–₹420, sustainable only above ₹425, while Carpenter added that the broader structure turns bullish only if the stock decisively clears the ₹415 level.
Carpenter noted that the stock has been in a corrective phase since hitting an all-time high of ₹528 in September 2024, lagging the benchmark indices’ recovery.
He warned that a breach of ₹390 could open downside towards ₹360, which may also act as a long-term accumulation zone.
Fundamentals And Policy Risks
Carpenter said that the company continues to be debt-free with a return on equity of about 28-29% and a return on capital employed of around 36-37%, as well as a stable dividend yield of 3.5%.
He also noted that the company’s diversified portfolio in FMCG, agribusiness, paperboards, and hotels provides stability, aside from the cigarette business.
Pal added that the FMCG segment continues to expand, while ITC’s balance sheet remains cash-rich and supportive of future growth.
However, both flagged risks from regulation, with GST 2.0 proposals to impose a uniform 40% sin tax on tobacco, alcohol and gaming stoking investor concerns.
What Should Investors Do?
Carpenter estimated ITC’s fair value near ₹373, suggesting the stock is modestly overvalued at current levels. He said attractive long-term entry points lie closer to ₹360–₹365, where technical and valuation factors converge.
Pal added that while ITC may face pressure in the short term and test the ₹390–₹400 support range, its strong fundamentals and defensive character make it a buy-on-dips candidate for long-term investors.
On Stocktwits, retail sentiment was ‘bearish’ amid ‘normal’ message volume.
ITC’s stock has declined 15.8% so far in 2025.
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