Robust Trading Volumes Amidst Price Decline
On the first trading day of 2026, ITC Ltd. emerged as one of the most actively traded stocks by value, with a total traded volume of 6.04 crore shares and a staggering traded value of ₹2,39,622.9 lakhs (₹2,396.2 crores). The stock opened at ₹402.7, touched a high of ₹402.7, but succumbed to selling pressure to hit an intraday low of ₹384.25 before settling at ₹385.3. This closing price represents a 5.3% drop from the previous close of ₹403, signalling a pronounced bearish sentiment among market participants.
Technical Weakness Evident Across Moving Averages
ITC’s price action is notably weak, trading below all key moving averages — 5-day, 20-day, 50-day, 100-day, and 200-day — underscoring a sustained downtrend. The breach of these technical support levels often triggers further selling, as short-term traders and algorithmic strategies react to negative momentum. The stock’s new 52-week low at ₹385 further confirms the erosion of investor confidence.
Sectoral Context and Relative Performance
The Cigarettes/Tobacco sector, to which ITC belongs, declined by 4.71% on the day, slightly underperforming the stock’s 4.57% fall. However, ITC marginally outperformed its sector by 0.92%, indicating that while the entire sector is under pressure, ITC’s relative weakness is somewhat contained. The broader Sensex index, in contrast, posted a modest gain of 0.15%, highlighting the stock’s divergence from the general market trend.
Institutional Interest and Delivery Volumes
Investor participation appears to be waning, with delivery volumes on 31 Dec 2025 falling sharply by 45.53% compared to the five-day average. The delivery volume stood at 77.48 lakh shares, suggesting that fewer investors are holding the stock for the long term, possibly due to concerns over valuation and growth prospects. This decline in delivery volume often signals reduced conviction among institutional investors and retail participants alike.
Liquidity and Trade Size Considerations
Despite the negative price action, ITC remains sufficiently liquid for sizeable trades. Based on 2% of the five-day average traded value, the stock can accommodate trade sizes up to ₹13.91 crores without significant market impact. This liquidity is a double-edged sword; while it facilitates large institutional trades, it also enables swift exits during periods of negative sentiment.
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Fundamental Assessment and Mojo Score Downgrade
MarketsMOJO’s comprehensive analysis has downgraded ITC Ltd. from a Hold to a Sell rating as of 29 Dec 2025, reflecting deteriorating fundamentals and subdued growth outlook. The company’s Mojo Score stands at 46.0, a level that indicates weak investment appeal. The Market Cap Grade is 1, signalling that despite its large-cap status with a market capitalisation of ₹5,04,917 crores, the stock’s quality metrics and growth prospects are currently unimpressive.
Valuation and Quality Metrics
ITC’s valuation has come under pressure as the stock trades near its 52-week low. The persistent decline below all major moving averages suggests that investors are factoring in slower revenue growth and margin pressures in the FMCG and tobacco segments. The downgrade in Mojo Grade from Hold to Sell is a clear indication that the stock’s risk-reward profile has shifted unfavourably, warranting caution among investors.
Market Sentiment and Outlook
The combination of high value turnover, declining delivery volumes, and technical weakness paints a cautious picture for ITC in the near term. Institutional investors appear to be reducing exposure, while retail participation is also subdued. The stock’s underperformance relative to the broader market and its sector peers suggests that further downside cannot be ruled out without a meaningful catalyst or improvement in fundamentals.
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Comparative Sector Performance and Peer Analysis
Within the FMCG sector, ITC’s performance contrasts with some peers that have managed to sustain or improve valuations despite sectoral headwinds. The tobacco segment’s regulatory challenges and shifting consumer preferences have weighed heavily on ITC’s outlook. Investors are advised to consider alternative FMCG stocks with stronger growth trajectories and more resilient fundamentals, as highlighted by recent peer comparison analyses.
Conclusion: Caution Advised for Investors
ITC Ltd.’s high value trading activity coupled with a sharp price decline and downgrade to Sell rating signals a period of heightened risk. The stock’s technical breakdown, falling delivery volumes, and weak Mojo Score underscore the need for investors to exercise caution. While liquidity remains adequate for institutional trades, the prevailing market sentiment suggests that ITC may continue to face selling pressure unless there is a significant turnaround in fundamentals or sector dynamics.
Investors should closely monitor upcoming quarterly results, regulatory developments in the tobacco industry, and broader FMCG sector trends before committing fresh capital to ITC. Diversification into better-rated peers with stronger growth prospects may offer a more favourable risk-reward balance in the current market environment.
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