ITC Mean Reversion Strategy

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Range-Bound to Mild Trending Markets

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Quick Reference

Strategy Type Mean Reversion with Bollinger Bands and RSI
Market Outlook Range-Bound to Mild Trending Markets
Risk Level Low to Moderate
Time Horizon Swing Trading (3-12 days)
Best Conditions Sideways markets, stable FMCG demand, dividend announcement periods
Avoid When Strong trending markets, cigarette taxation news, ESG-driven selloffs, pre-budget volatility

India-Specific Notes

Margin Types

MIS Intraday margin ~12-15% of contract value
NRML Full margin for positional trades

Index Weightage

Nifty 50 ~4-5% weightage (top 10 constituent)
Nifty Fmcg ~25-30% weightage (largest constituent)

Company Profile

Conglomerate Diversified Indian conglomerate
Market Position India's largest cigarette manufacturer, leading FMCG company
Business Segments ~40% of revenue, ~80% of profit - legacy cash cow • Aashirvaad, Sunfeast, Bingo, Classmate, Fiama - growth engine • ITC Hotels - luxury hospitality chain • Leading paperboard manufacturer • Commodity trading, e-Choupal network
Dividend Policy High dividend payout, attractive dividend yield (~3-4%)

Key Drivers

Cigarette Taxation Union Budget excise duty changes - major volatility event
Fmcg Growth Non-cigarette FMCG growth validates diversification story
Dividend Dividend announcements create support levels
Esg Concerns ESG/sin stock concerns can create selling pressure
Rural Demand FMCG demand linked to rural consumption
Hotel Recovery Post-COVID hotel business recovery

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