The rise of ITC to an all-time high demonstrates the desire of Indian investors for stability

This month, ITC has gained impressively, while the headline index has fallen for six straight days. The Nifty has held the 17,450 mark, and metal stocks have fallen.

In a market stirred up by worries about corporate governance, the shares of Indian giant ITC Ltd have risen to a record high, suggesting investors may be beginning to focus on stability.

With a 15% increase this year, it is the NSE Nifty 50 Index stock with the highest performance, increasing its market value to around USD 57 billion. While US short-seller Hindenburg Research's charges against the Adani Group made Adani Enterprises Ltd and Adani Ports & Special Economic Zone Ltd. the index's poorest performers, its rise has quickened this month.

An all-season stock

ITC — whose operations range from tobacco to food and hotels — has one of the highest dividend yields and returns on equity among Nifty members. It also ranks top in a Bloomberg Economics analysis of governance, liquidity and leverage at Indian conglomerates. Tech Mahindra Ltd, a software services provider with similar characteristics to ITC, is Nifty’s second-best gainer year to date.

Indian investors are increasingly drawn to stable returns. Dividend yield has been the top-performing strategy for a long-short portfolio of the nation’s blue chips this year, while price-target changes and earnings revisions rank top over 10 years, according to data compiled by Bloomberg.

Amid this search for stability, ITC’s gains have been pronounced, driving the stock up more than 75% in the past year. The surge in investor attention marks a big change from a couple of years ago when social-media memes lampooned the company’s stock as boring after years of stagnation and scrutiny of global tobacco businesses.

ITC has gotten a further boost from stronger-than-expected third-quarter earnings due to better performance in its cigarette business and a recovery in its hotel segment.