Itc Takes Off On Rally By Punters

The ITC stock has been at the centre of attention for the past few trading sessions as volumes and prices zoomed to record levels. The stock witnessed trading in shares worth a whopping Rs 733 crore on Friday on the National Stock Exchange.

The stock has gained 10.53 per cent on the National Stock Exchange and 10.19 per cent on the Bombay Stock Exchange over last Fridays close. The stock closed on the NSE at Rs 534.15 against last Fridays close of Rs 483.05. It closed on the BSE at Rs 535 against last Fridays close of Rs 485. Brokers say that punters are finding the ITC counter very attractive for speculating. However, heavy buying by FIIs has also been reported in the stock. Brokers also say that the stock at current level is overpriced compared with its fundamentals and the general outlook for the cigarette industry.

 

Says a leading BSE broker, who feels that the stock is overpriced: ITC is a huge corporation in the cigarette and hotel business. However, the price seems to be very high and is not in tune with the fundamentals. It is a very liquid stock. Speculators find it attractive for trading.

An analyst at a leading institutional brokerage feels that there is 80 per cent speculation in the ITC stock at present due to the board meeting that took place recently. When the company will announce the book closure, the stock will move into a no-delivery period. The stock witnessed about 1,16,500 shares at an average price of Rs 504.50, which was Rs 8.35 higher than the official close of Rs 496.15 on June 11.

The floating stock of ITC is not so high compared with Reliance and SBI. There are big speculators with holdings in ITC who are involved in punting this stock. When they buy this stock, it is very easy to move up the price as it squeezes the floating stock. However, it does not deserve the attention it is getting considering the problems the company is facing, he said.

The ITC stock, in the last settlement at the BSE, attracted a weighted average badla rate of Rs 0.06 and there is only a small floating stock of the scrip at 1.68 lakh shares in the market.

Brokers say that despite having a 60-70 per cent market share in the cigarette industry, the company has yet to tackle its excise liabilities. This deters long-term investors from taking a position in the stock.