Delivery-based trades of about 17 lakh shares of ITC Ltd in the last two trading sessions have seen the price of ITC spurting from around Rs 405 to Rs 434 on Thursday in Calcutta. According to reliable market sources, the buying was done on behalf of two US-based funds -- GM Fund and University of Columbia -- at Rs 400-Rs 405 level.

Marketmen are now expecting a net profit in the region of Rs 350 crore to Rs 370 crore. The optimists among marketmen talk about a PAT of Rs 410 crore. But a more realistic figure would be Rs 350 crore. SSKI Securities has estimated the net profit for 1996-97 at Rs 368 crore.

Top company sources said the profit will be much less than the optimistic market forecasts of Rs 410 crore to Rs 440 crore. ITC is scheduled to announce its results on May 20.

The company is required to make provisions/write-offs close to Rs 100 crore which includes Rs 54.29 crore on account of outstandings from Singapore-based ITC Global Holdings Pte. In addition, the company is likely to write-off the balance of Rs 22.27 crore expenditure incurred on the sponsorship of the 1995 Wills World Cup. In 1995-96, the company had written off Rs 18.32 crore on this account.

The ITC scrip has shown remarkable resilience and has bounced back with fresh support at lower levels coupled with strong speculative buying. Says a technical analyst here, ``all major moves of ITC are of 105 to 115 points from any significant top or bottom".

He adds: ``From the bottom of 240.50 touched on November 6, 1996, the scrip moved to make a top of Rs 469 on March 5, 1997, a two-cycle movement of 115 each. Then, from the top of 469 the correction phase took the scrip down to 345.25 on April 1, 1997 (the day following the withdrawal of Congress support to the United Front government), a fall of Rs 124. Add a usual upmove of Rs 105-115 to the bottom of Rs 345.25 and the forthcoming top appears to be around Rs 460 level.''

As for other indicators, the sideways movement of the scrip in the earlier part of this month is confirmed by the four-day and nine-day moving average, which are at Rs 406.85 and Rs 406.48 respectively. Analysts say the medium-term eight-week moving average is falling and is at Rs 403.47, while the 25-week moving average is rising at 379.28.

``The scrip last took support at 25-week moving average and has crossed the eight-week moving average,'' the analyst explains. He added that although the falling eight-week moving average indicates weakness in the short term, the fundamental strength of the scrip is evident from the fact that the scrip is ruling above the 200-day moving average.''

Another chartist points out that the scrip fell from the high of Rs 469 to Rs 345 in just 17 trading sessions but the climb back to current level of Rs 434 was slower and took 29 trading sessions. His forecast is that the scrip will face a crucial test around Rs 458 level where there is stiff resistance.

This chartist has another interesting explanation to offer. He says: ``The 30-month Gann cycle (where the monthly high/low is plotted) is striking as it clearly brings out the phenomenon of major tops in the scrip's historical price data.'' Interestingly, the scrip's major tops in the last five years were at Rs 462.50 (intra-day high on March 31, 1992), Rs 455.00 (on September 30, 1994) and Rs 469 (on March 31, 1997). Between these tops, the intervening period is 30 months.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.