ITC share price surges to near 52-week high. Should you buy?

ITC share price surges to near 52-week high. Should you buy?

 ITC share price today edged closer to its 52-week high of Rs 239 per share as the stock rallied an astonishing 7% in opening deals on Thursday after a somewhat sluggish performance amid the recent bull market rally . The cigarette-to-hotel conglomerate's stock remains in a range bound trend and is up nearly 8% this year compared to a nearly 23% rise in the benchmark Sensex.

The sudden rally in the counter today is a matter of joy for many investors, who have been waiting for the stock to rise above the narrow range for more than a year. Stock market experts say that due to prolonged undervaluation, the rise in the stock has been as expected. He believes that the fundamentals of the company are very strong and its revenue is expected to go north, given the unlock theme. Also, if there is any restructuring in the business it will be the biggest positive trigger for any revaluation for the company.

Santosh Meena, Head of Research, Swastika Investmart said, “It is I-Day on Dalal Street where stocks like IndusInd Bank, Idea, Indstore, IDFC First Bank are zooming, but the biggest surprise is the 7% move in sleeping giant ITC. " There is no latest fundamental development for the company, but everyone knows the value of the company as it is one of the cheapest counters in the FMCG pack where most of ITC's business verticals are doing well, he said.

Technically, ITC has seen a powerful breakout of the double bottom formation which was formed in its 200-DMA however “235-240 is a critical supply area and if it manages to break out of the 240 level then there will be a breakout of the double bottom formation.” We can say that is the beginning of a fresh bull run where we can expect a target of 285-300 in the short term. On the downside, the 220-215 zone will act as a strong support zone," suggested Meena.

The shares of ITC were highly undervalued as they did not participate in the market rally after the second wave of Covid-19. “This rally can be attributed to the stock specific trading strategy of market investors, who are investing in quality stocks available at discounted prices. But, the stock has not been holding higher levels. It is intermittent. Remains range bound. ₹200 to ₹240 for last 10 months. New buyers should wait and see if the stock manages to break its jinx and sustain higher highs,” said Avinash Gorakshakar, Profitmart Securities said the head of research.

Stock market participants were also expecting announcements related to the separation of the group of businesses, which they believe could act as a major trigger for the stock.

Investment strategy in respect of ITC shares unveiled; Ravi Singhal, Vice Chairman, GCL Securities said, “Market is anxiously awaiting fresh breakout at ₹230 on close basis. If ITC stock closes above ₹230 today, then only one will hit this counter. Can buy for 3 month target of maintaining ₹270. Stop loss at ₹224. He said that there is not much trigger in the market. This growth in the counter is mainly due to the stock at a discounted price against its peers like Nestle, Britannia, etc. He added that the major trigger that the market is expecting is the announcement of the demerger, which is expected to happen in the company.

The Kolkata-headquartered company had reported a consolidated net profit of ₹3,343 crore for the quarter ended June, as against Rs 2,567 crore in the corresponding quarter of the previous fiscal. Its revenue from operations grew 36% to ₹14,240.76 crore during the quarter under review, as against ₹10,478 crore in the year-ago quarter.

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