Chart Check: Down nearly 10% from highs! This Sensex stock is showing signs of trend reversal; time to buy?

ITC Ltd, part of the diversified FMCG space, has fallen by about 10% from its July 2023 highs but higher high and higher low formation for the past 3 weeks along with a rise in the Relative Strength Index (RSI) signify strength.

Short-term traders can look to buy the stock for a target of Rs 500 in the next 2 months, suggest experts.

ITC which has a market capitalization of Rs 5.6 lakh cr trades at a P/E multiple of 28.85x and an Earnings Per Share (EPS) of 15.67, BSE data showed.


ITC, which is part of the S&P BSE Sensex index, hit a record high of Rs 499 on 24th July 2023 but it failed to hold on to the momentum.

The stock took support above the Rs 430 levels multiple times in August as well as in September 2023 before bouncing back.

On the weekly charts, the diversified FMCG player has been making higher highs and higher lows for the past 3 weeks. The daily RSI has been gaining momentum since early September 2023 which is a sign of strength.

The daily Relative Strength Index (RSI) is at 53.4. RSI below 30 is oversold and above 70 is considered overbought, Trendlyne data showed.

In terms of price action, the stock is trading below the 50-DMA but above 5,10,30,100 and 200-DMA on the daily charts.

“ITC stock has corrected well from the level of 500 to bottom out at around 435 levels and has maintained good support on previous occasions also,” Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt., said.

“The stock has bounced back with a positive candle pattern on the daily chart to signify strength and potential to give an upward movement in the coming days,” she said.

“The RSI has been on the rise and has shown a trend reversal to improve the bias and with decent volume participation seen, we recommend a buy in this stock for an upside target of 500 in the next 2 months, keeping a stop loss of 430,” recommends Parekh.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)