Tobacco major ITC came under sharp selling pressure on Thursday, and languished at the bottom of the 50-share Nifty with over 2 per cent cut.
Traders attributed the selloff in ITC shares to Uttar Pradesh government’s decision to ban the sale of loose cigarette sticks in the state. UP is India’s most populous state, and contributes 3-4 per cent to ITC’s volumes.
Analysts said, Around 70 per cent of the cigarette sales in India are in loose stick forms, so the ban on sale of loose cigarette sticks will hit ITC’s sales volume.
According to reports, Maharashtra is also planning to ban sale of loose cigarettes.UP is the second state after Punjab to ban the sale of single stick cigarette sales.
ITC has also been weight down by repeated hikes in excise duty on cigarettes; excise duty on cigarettes has gone up by 30 per cent in the past 18 months.
The selloff in ITC impacted the broader Nifty, which traded lower after six days of rally. ITC is the fourth most impressive stock in the blue chip Nifty index.
As of 09.50 a.m., ITC shares were down 2.1 per cent at Rs 340 as compared to 0.4 per cent fall in the Nifty.