ITC Ltd Falls 13.39% Amid Sharp Open Interest Surges and Sector Weakness

29 December 2025: Open Interest Surge Amid Mixed Signals

ITC Ltd’s derivatives segment saw an 11.4% increase in open interest on 29 December, rising from 171,823 to 191,398 contracts. This surge accompanied a futures volume of 67,999 contracts and a combined derivatives market value exceeding ₹2,28,770 lakhs. Despite this heightened activity, the stock price declined marginally by 0.47% to close at Rs.402.40, hovering just above its 52-week low of Rs.390.15. The stock traded within a narrow range, reflecting subdued volatility amid cautious investor sentiment.

Technically, ITC was trading above its 20-day moving average but below its 5-day, 50-day, 100-day, and 200-day averages, indicating short-term support but longer-term resistance. Delivery volumes had fallen sharply, signalling reduced conviction among long-term holders. The stock’s performance closely mirrored the FMCG sector and Sensex declines, suggesting sectoral and market-wide influences predominated over company-specific factors.

30 December 2025: Downgrade to Sell by MarketsMOJO

On 30 December, MarketsMOJO downgraded ITC Ltd from Hold to Sell, citing deteriorating technical indicators, expensive valuation, and flat recent financial performance. The Mojo Score dropped to 46.0, reflecting a cautious outlook. Technical metrics such as MACD and KST turned bearish on weekly and monthly timeframes, while the stock traded near its 52-week low of Rs.391.50.

Valuation concerns centred on a high Price to Book ratio of 7.1 despite a robust Return on Equity of 33.4%. The stock had underperformed the Sensex over the past year and year-to-date, with returns of -11.17% and -12.04% respectively, contrasting with Sensex gains of 7.62% and 8.39%. Financial trends were flat, with deteriorating debtor turnover and a modest dividend payout ratio of 51.68%. Institutional ownership remained high at 84.83%, but the downgrade reflected a convergence of near-term headwinds.

1 January 2026: Stock Hits 52-Week Low Amid Sector Weakness and Rising Open Interest

ITC Ltd’s share price fell sharply to a 52-week low of Rs.386.5 on 1 January 2026, closing down 3.44% on the day. The decline was in line with the Cigarettes/Tobacco sector’s 3.74% fall but contrasted with the Sensex’s 0.2% gain. The stock traded below all key moving averages, signalling sustained bearish momentum. Despite the price drop, the company’s profits had increased by 18% over the past year, though valuation metrics remained elevated.

Derivatives activity intensified with a 19.2% surge in open interest to 179,189 contracts and futures volume reaching 129,830 contracts. The notional value of futures and options combined exceeded ₹1,22,196 lakhs, indicating fresh positions being established amid falling prices. Delivery volumes declined sharply, suggesting speculative trading rather than long-term accumulation.

This divergence between rising open interest and falling price points to increased bearish bets or hedging strategies. The downgrade to Sell and technical weakness reinforced cautious sentiment among investors.

2 January 2026: Further Decline to New 52-Week Low and Record Open Interest

On 2 January, ITC Ltd’s shares plunged further to a fresh 52-week low of Rs.345.35, down 3.68% intraday and closing with a 3.79% loss. The stock underperformed its sector and the broader market, which saw the Sensex gain 0.81%. The Cigarettes/Tobacco sector declined 3.44%, continuing to weigh on ITC’s performance. The stock remained below all major moving averages, confirming a sustained downtrend.

Open interest surged by 24.44% to 384,157 contracts, with total volume reaching 333,479 contracts. The notional value of futures and options contracts was substantial, with options alone valued at ₹1,74,198 crores. Delivery volumes spiked dramatically, indicating increased investor repositioning amid the price decline. The weighted average price for the day was near the intraday low, a bearish signal reflecting selling pressure.

Valuation metrics shifted from expensive to fair, with the P/E ratio moderating to 19.19 and Price to Book value at 6.42. Despite this, the downgrade to Sell and technical deterioration suggest limited near-term upside. Institutional ownership remains strong at 84.83%, underscoring confidence in long-term fundamentals despite short-term volatility.

Daily Price Performance vs Sensex

Key Takeaways

Negative Price Momentum: ITC’s share price declined 13.39% over the week, sharply underperforming the Sensex’s 1.35% gain. The stock hit multiple 52-week lows, reflecting sustained selling pressure and sectoral weakness.

Derivatives Market Activity: Open interest surged significantly on multiple days, with increases of 11.4%, 19.2%, and 24.4% on 29 Dec, 1 Jan, and 2 Jan respectively. This heightened activity amid falling prices suggests increased bearish bets and hedging strategies.

Technical Weakness: The stock traded below all major moving averages by the week’s end, signalling a bearish trend. Technical indicators such as MACD and KST turned bearish, reinforcing downside risks.

Valuation Shift: ITC’s valuation moved from expensive to fair, with P/E moderating to 19.19 and Price to Book at 6.42. Despite this, the downgrade to Sell and price weakness temper optimism.

Strong Institutional Holding: Institutional investors hold 84.83% of shares, indicating confidence in long-term fundamentals despite short-term volatility and price declines.

Sectoral Headwinds: The Cigarettes/Tobacco sector’s weakness contributed materially to ITC’s underperformance, reflecting regulatory and demand challenges.

Conclusion

ITC Ltd’s week was characterised by sharp price declines, multiple 52-week lows, and a downgrade to a Sell rating amid deteriorating technical and valuation metrics. The surge in derivatives open interest alongside falling prices indicates growing bearish sentiment and repositioning by traders. While the company’s long-term fundamentals remain robust and institutional ownership high, near-term challenges persist due to sectoral pressures and technical weakness. Investors should monitor open interest trends, delivery volumes, and upcoming financial results closely to gauge potential stabilisation or further downside risks. The divergence between ITC’s performance and the broader market rally underscores the stock-specific and sector-specific headwinds shaping its current trajectory.

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