ITC Limited shares are currently undergoing a consolidation phase, with analysts pinpointing a crucial technical level that could signal a significant upward movement. According to market expert Pradip Haldar, founder and CEO at PHD Capital, the Fast-Moving Consumer Goods (FMCG) giant is establishing a base below the Rs 300 mark.
Key Breakout Level at Rs 307
Haldar emphasizes that a decisive and sustained breakout above Rs 307 is the key indicator to watch. Should ITC shares successfully clear this hurdle, it could open the door for a rally, potentially pushing the stock towards the Rs 340-350 range. Until this breakout occurs, the stock is expected to remain within its current consolidation pattern.
Base Formation and Market Dynamics
The current base formation below Rs 300 suggests that while selling pressure is gradually being absorbed, a clear confirmation of a trend reversal is yet to materialize. This period of consolidation is critical for short-term traders monitoring the stock over a two-month horizon. Haldar notes that the broader business fundamentals for ITC remain strong, despite the technical caution.
Lingering Impact of GST Increase
One factor contributing to the stock's pressure, according to Haldar, has been the Goods and Services Tax (GST) increase on ITC's cigarette business. This regulatory change triggered sustained selling pressure, the effects of which are still evident on the stock charts. The ongoing consolidation is partly a reflection of this lingering overhang, preventing the stock from entering a fresh uptrend.
“After the GST increase on the cigarette business, there has been continuous selling pressure,” Haldar stated, underscoring that the base formation is either still incomplete or in progress. This means investors may need to exercise patience before a clear upward momentum is established.
Strategic Levels for Traders
For traders looking to position themselves tactically, Haldar has outlined a specific risk-reward framework. He recommends setting a stop loss at Rs 255. The critical breakout level to monitor remains Rs 307. “As soon as it crosses 307 and sustains, you could see a move towards Rs 340-350 again,” he advised. Therefore, Rs 307 acts as the near-term trigger for renewed bullish sentiment. A failure to convincingly surpass this level could prolong the stock's range-bound movement.
Strong Business, Requires Patience
Despite the technical warnings, Haldar maintains a positive outlook on ITC's underlying business strength. He estimates that base formation typically spans one to two quarters, reinforcing the idea that a significant rerating may require more time. His message to existing investors is clear: “It is a solid business… there is no need to panic here.” For long-term holders, a 'hold' strategy is suggested, with short-term trading decisions dependent on ITC's ability to reclaim and sustain levels above Rs 307.