Stock Performance and Market Context
On 2 January 2026, ITC Ltd. closed at ₹348.90, continuing its downward trajectory after hitting a new 52-week low of ₹345.25 earlier in the day. The stock has declined by 13.67% over the past two days, underperforming its sector, which fell by 3.84%, and the broader Sensex, which gained 0.32% on the same day. ITC’s day low represented a 5.11% drop intraday, with the weighted average price indicating that most volume traded near this low point. The stock is currently trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day, underscoring the prevailing bearish momentum.
Investor participation has notably increased, with delivery volumes surging to 15.66 crore shares on 1 January, a staggering 969.83% rise compared to the five-day average. This heightened activity reflects growing interest, possibly from both short sellers and bargain hunters, amid the stock’s recent weakness. ITC’s market capitalisation stands at ₹4,55,991 crore, categorising it as a large-cap stock, yet its Market Cap Grade remains at a low 1, indicating limited upside potential from a capitalisation perspective.
Call Option Activity: Strike Prices and Expiry Patterns
The most active call options for ITC Ltd. are concentrated around the January 27, 2026 expiry, with five strike prices attracting substantial volumes. The strike prices of 355, 365, 375, 385, and 410 have recorded significant contract trades, with the highest number of contracts traded at the 365 strike price (10,226 contracts), followed by 410 (7,023 contracts) and 375 (6,404 contracts). The turnover for these strikes ranges from ₹53.94 lakh at the 410 strike to ₹738.12 lakh at the 355 strike, indicating robust liquidity and investor interest across the board.
Open interest data further highlights the 410 strike price as the most heavily held, with 11,807 contracts outstanding, suggesting a strong bullish positioning at this level despite the stock trading well below it. The 385 and 375 strikes also show elevated open interest at 6,890 and 5,653 contracts respectively, reinforcing the notion that traders are anticipating a potential rebound or are hedging existing positions.
Investor Sentiment and Positioning
The concentration of call option activity at strike prices ranging from ₹355 to ₹410, all above the current underlying value of ₹348.90, indicates a predominantly bullish sentiment among option traders. This positioning could reflect expectations of a recovery in ITC’s share price over the next few weeks, possibly driven by sectoral factors or company-specific developments. However, the stock’s recent downgrade from Hold to Sell by MarketsMOJO on 29 December 2025, with a Mojo Score of 46.0, tempers this optimism. The downgrade reflects deteriorating fundamentals or technical weakness, signalling caution to investors.
Despite the bearish stock price action, the active call buying suggests that some market participants are either speculating on a short-term rally or employing strategies to hedge downside risk. The disparity between the stock’s weak performance and the bullish option positioning highlights the nuanced nature of market expectations and the potential for volatility as expiry approaches.
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Technical and Fundamental Analysis
ITC’s technical indicators remain weak, with the stock trading below all major moving averages, signalling a downtrend that has yet to find support. The recent 52-week low and the sharp decline over two days reinforce this bearish outlook. The sector’s decline, particularly in cigarettes and tobacco, has compounded pressure on ITC’s share price, reflecting broader industry challenges such as regulatory headwinds and shifting consumer preferences.
Fundamentally, the downgrade to a Sell rating by MarketsMOJO, accompanied by a low Mojo Score of 46.0, suggests that the company’s financial health and growth prospects are currently viewed as suboptimal. The Market Cap Grade of 1 further indicates limited capital appreciation potential relative to peers. Investors should weigh these factors carefully against the speculative call option activity, which may be driven by short-term trading strategies rather than long-term conviction.
Expiry Date and Implications for Traders
The January 27, 2026 expiry date for the active call options is less than a month away, placing a time constraint on the anticipated price movements. Traders holding these call options will be closely monitoring ITC’s price action and sector developments to capitalise on potential gains or to adjust hedges accordingly. The high open interest at strikes significantly above the current price suggests that many are betting on a rebound or volatility spike before expiry.
Given the stock’s recent weakness and the sector’s challenges, the risk of these call options expiring worthless remains significant. However, the volume and turnover figures indicate that market participants are willing to pay a premium for the possibility of upside, reflecting a cautious but opportunistic stance.
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Outlook and Investor Considerations
Investors and traders should approach ITC Ltd. with caution given the current technical and fundamental backdrop. The heavy call option activity at strike prices above the current market value suggests a segment of the market is positioning for a recovery, but this is counterbalanced by the stock’s recent poor performance and downgrade. The divergence between option market optimism and spot market weakness may lead to increased volatility in the coming weeks.
For long-term investors, the downgrade and low Mojo Score imply that ITC may face headwinds in the near term, and alternative FMCG stocks with stronger fundamentals and technicals might offer better risk-reward profiles. Short-term traders, however, could find opportunities in the option market to capitalise on potential rebounds or volatility spikes, provided they manage risk prudently.
Overall, ITC Ltd.’s current market dynamics illustrate the complex interplay between bearish stock price trends and bullish option market positioning, underscoring the importance of comprehensive analysis before making investment decisions.
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