Shares of major tobacco companies came under sharp selling pressure in Thursday’s morning trade after the government announced higher taxation on cigarettes and tobacco products. ITC shares dropped more than 6 percent to ₹378.45 apiece, emerging as the top laggard on the Nifty 50 index. The decline followed the finance ministry’s notification of revised excise duties, which raised concerns over margin pressure and potential demand impact. Meanwhile, Godfrey Phillips India witnessed even steeper losses, with its shares tumbling 10 percent to ₹2,484.80 apiece during early trading hours. Apart from the tax-related headwinds, the stock was also weighed down by a large block deal in the counter.
The finance ministry has notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026, tightening the tax framework for tobacco products. Under the new rules, excise duty on cigarettes has been set in the range of ₹2,050 to ₹8,500 per 1,000 sticks, depending on the length of the cigarette. The revised duty structure will come into effect from 1 February, triggering concerns among investors over higher costs and pricing challenges for tobacco manufacturers, which reflected immediately in stock prices.
ITC's share price has been under pressure this year, largely due to British American Tobacco (BAT) selling its stake in the company, a 40% GST slab on “sin” goods, corrections in the FMCG sector, and caution due to ITC Hotels' demerger. ITC was the biggest loser on the Nifty 50 index and also led declines on the FMCG index which was trading 1.6% lower.Shares of ITC were trading at , their lowest level since June 2024, and were also on track for their worst day since February 2022.
ITC shares have declined almost 12% year-to-date, compared to an 8% gain in the equity benchmark Sensex. Over the last two years, the stock has declined 6%, while on a longer timeframe of five years, the stock has delivered a solid return of 105%. According to experts, as long as ITC holds above ₹370 on a monthly closing basis, the broader bullish trend remains intact. On the upside, the ₹440–460 zone remains the immediate resistance area, followed by the all-time high band of ₹490–500. A decisive monthly close above ₹500 would mark a strong bullish breakout and could trigger a fresh momentum phase, opening the path towards ₹600+ levels over the medium to long term. On the downside, ₹370 stands out as a crucial long-term support; as long as the stock holds above this zone, the broader uptrend remains intact. However, a sustained breakdown below ₹370 on a monthly closing basis may weaken the structure and expose the stock to the next major support around ₹300. Overall, ITC offers steady cash flows, improving growth visibility and limited downside risk. As consumption demand recovers and margins improve, the stock offers long-term compounding potential for patient investors.