Index Membership and Market Significance
As a constituent of the Nifty 50, ITC Ltd. holds a significant place in India’s equity landscape. The index membership not only reflects the company’s market capitalisation and liquidity but also ensures substantial passive fund flows from index-tracking mutual funds and exchange-traded funds (ETFs). This status typically provides a degree of price support and visibility among institutional investors.
However, ITC’s recent performance has been disappointing relative to its benchmark. Over the past year, the stock has declined by 21.10%, contrasting sharply with the Sensex’s gain of 9.76%. This divergence highlights sector-specific challenges and company-specific headwinds that have weighed on investor sentiment.
Institutional Holding Dynamics
Institutional investors have been adjusting their exposure to ITC amid evolving market conditions and sectoral shifts. The company’s Mojo Score, a comprehensive metric assessing fundamentals, momentum, and valuation, currently stands at 48.0, categorising it as a 'Sell'—a downgrade from its previous 'Hold' rating as of 09 Feb 2026. This downgrade reflects deteriorating financial metrics and subdued price momentum.
ITC’s market capitalisation remains robust at ₹3,96,863.34 crores, firmly placing it in the large-cap category. Yet, the stock is trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—indicating sustained bearish technical trends. The stock’s price is also just 4.72% above its 52-week low of ₹302, underscoring the pressure it faces.
Over the last five trading sessions, ITC has recorded a consecutive decline of 3.07%, marginally underperforming the FMCG sector’s overall movement. Today’s session saw a 0.46% drop, slightly worse than the Sensex’s 0.43% fall, signalling continued investor caution.
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Sectoral Context and Comparative Performance
ITC operates primarily within the FMCG sector, with a significant presence in cigarettes and tobacco products. The sector’s recent results have been mixed, with 107 stocks having declared results: 28 reported positive outcomes, 52 remained flat, and 27 posted negative results. ITC’s performance aligns more with the subdued segment of this spectrum.
When benchmarked against the FMCG industry’s average price-to-earnings (P/E) ratio of 16.94, ITC’s P/E of 16.49 suggests a valuation slightly below the sector average, reflecting cautious investor expectations. This valuation discount may be attributed to regulatory pressures on tobacco products, shifting consumer preferences, and competitive challenges in non-cigarette FMCG categories.
Longer-term performance comparisons further illustrate ITC’s struggles. Over three years, the stock has declined by 12.37%, while the Sensex surged 38.13%. Even over five years, ITC’s 64.11% gain trails the Sensex’s 66.79%, and the gap widens significantly over a decade, with ITC’s 72.61% growth dwarfed by the Sensex’s 253.69% advance.
Benchmark Status Impact on Investor Behaviour
ITC’s inclusion in the Nifty 50 ensures it remains a focal point for large institutional investors and index funds. However, the downgrade in its Mojo Grade to 'Sell' and the deteriorating technical indicators have prompted some funds to reduce their holdings or reallocate capital to higher-scoring large caps within the FMCG space.
This shift is evident in the stock’s relative underperformance over the past month (-0.64%) and quarter (-21.59%) compared to the Sensex’s flat and -4.46% returns, respectively. The year-to-date decline of 21.40% versus the Sensex’s 3.90% fall further emphasises the stock’s laggard status.
Institutional investors are increasingly favouring FMCG companies with stronger growth prospects, diversified product portfolios, and better momentum scores. This trend is likely to continue unless ITC demonstrates a clear turnaround in fundamentals or strategic initiatives that can reignite investor confidence.
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Outlook and Strategic Considerations
Looking ahead, ITC faces a challenging environment marked by regulatory scrutiny on tobacco products, evolving consumer trends, and intensifying competition in the FMCG sector. The company’s ability to diversify its revenue streams and innovate in non-cigarette categories will be critical to reversing its recent underperformance.
From an investor’s perspective, the current technical and fundamental signals suggest caution. The downgrade to a 'Sell' rating by MarketsMOJO, combined with the stock’s position near its 52-week low and negative momentum across multiple timeframes, indicates limited near-term upside.
Nevertheless, ITC’s large market capitalisation and index membership ensure it remains a core holding for many institutional portfolios, providing some degree of price support. Investors should closely monitor quarterly results, management commentary, and sector developments to gauge any shifts in the company’s trajectory.
In summary, while ITC Ltd. continues to be a heavyweight in the Nifty 50 and FMCG sector, its recent performance and rating downgrade highlight the need for investors to reassess their exposure in light of evolving market dynamics and institutional positioning.
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