Bears get smoked with surge in ITC, gives trendline breakout

FMCG giant, ITC, which holds 45.4 per cent weightage in Nifty FMCG index and 5.6 per cent in Nifty50 index, surged as much as 3.9 per cent in Monday’s trade. ITC opened with a gap-up of 3 points from previous high and surged up after consolidating till afternoon trade. ITC, which holds 80 per cent market share in cigarettes buoyed after GST Council kept the cess on cigarettes unchanged. Godfrey Phillips too remained up with decent gains.

ITC is seen making lower tops and lower bottoms since its gap-down opening in July 2017. Even the movement post gap-down opening has been bearish. On November 15 and December 7, the stock hit double bottom at 250 levels and surged up to 290 levels. Meanwhile, the stock also breached multiple point downward sloping trendline breakout at 270, but witnessed a pullback post 290 levels to trade below the trendline level. ITC attempted to retest the trendline on February 23, but failed and tumbled for 6 consecutive sessions thereafter.

Now again the stock has broken out of the trendline level on Monday with volume spurt and 14-period RSI positive crossover. Thereby going forward, we hold a potential upside in the stock if 269-270 is sustained on a closing basis.