ITC is set to hit Rs 240 levels in the medium-term. Stay invested for gains

After rallying 9 per cent last week, ITC is consolidating on Tuesday with the stock trading 0.5 per cent lower in a strong market. At 10:06 AM, shares of the company stood at Rs 187.85 on the BSE, down 0.42 per cent against a 0.7 per cent rise in the benchmark S&P BSE Sensex.

The stock has been a laggard over the past few months, rallying 26 per cent from the March 2020 low as compared to 64 per cent rise in the S&P BSE Sensex. It has even underperformed the S&P BSE FMCG index that rose 29 per cent during this period, ACE Equity data show.

Here's how the stock looks on technical parameters and what should be your trading strategy.

After the breakdown below 200-day moving average (DMA) in June 2019, this is the second attempt that the stock is making to conquer the significant moving averages. The first attempt was in August 2020, which failed to attract follow-up buying. This time the price is resilient to break downward showing a firm strength on the upside, as per the Relative Strength Index (RSI).

The medium-term perspective is gradually turning bullish and this may stay strong till the stock defends Rs 160 levels. The overall trend suggests that the counter should hit Rs 240 levels, which is its 200-weekly moving average (WMA).

That said, an immediate breakout indicates a rally towards Rs 199 and Rs 208 levels. Upon breaching these levels decisively, the uptrend will get confirmed and the stock may see a quick run towards the above-mentioned level. The support on a closing basis comes in at Rs 180.

Another key technical indicator - the Moving Average Convergence Divergence (MACD) - has conquered the zero line upward successfully. This also exhibits an upside direction in the coming sessions, as per the daily chart. The volume is showing consistent surge as the price scales higher levels, suggesting the bulls are gearing up for higher levels. CLICK HERE FOR THE CHART