ITC is turning into a favourite of the Dalal Street. The cigarette maker, in which British American Tobacco owns a 25.4 per cent stake, this week
overtook traditional Reliance Industries Ltd (RIL) as the biggest weighting on the Sensex.
On Thursday, it surpassed RIL to claim the most powerful stock status pushing the energy giant to the second spot.
Earlier in the week, ITC had dethroned RIL from the top position but its status proved to be short-lived when it slipped to the second position soon after.
INDIA's BEST CEOs: ITC's YC DeveshwarHowever, at the end of trade on Thursday,
ITC commanded 9.11 per cent weightage while
RIL had 9.10 per cent weight followed by Infosys with 7.99 per cent weight. Shares of ITC settled 1.12 per cent higher while RIL was down 1.01 per cent at close.
To many fund managers in India's version of Wall Street, ITC provides both safety as a consumer staple stock and growth potential as the rising purchasing power of Indian consumers will allow the firm to raise cigarette prices.
By contrast, RIL has suffered a multitude of recent downgrades due to doubts about its natural gas output and its refining margins. Consequently,
ITC shares have surged 20 per cent this year as of Wednesday's close, versus an 8 per cent gain in Reliance shares.
"ITC provides safety and growth while RIL is getting bogged down by lack of triggers, government intervention, falling margins and tepid earnings growth," said Andrew Holland, CEO, institutional equities and equity proprietary trading, Ambit Capital.
"From buy-side perspective, ITC is better than Reliance to hold for next one year," he added.
INDIA's 100 YEAR OLD COMPANIES: ITC - The one with imperial touch Analysts expect ITC to post strong double-digit earnings per-share growth in fiscal 2013 and 2014, compared to far lower single-digit growth for RIL, according to StarMine data.
ITC regained the top slot in terms of Sensex weightage, which is measured by the value of a firm's free- float. Infosys slipped to the third place after its shares crashed 13 per cent.
Agencies
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