ITC Ltd shares rose most in one year at the end of the day today after making a new all-time high on expectations that the effective tax incidence on cigarettes would fall after the recent implementation of GST. The blue-chip stock is the lead gainer on Sensex and Nifty.
ITC Ltd shares jumped today and ended with the biggest single-day gain in a year, after making a new all-time high on expectations that the effective tax incidence on cigarettes would fall after the recent implementation of GST. The blue-chip stock was the lead gainer on Sensex and Nifty, ending up 5.7% at Rs 342.3, after rising to Rs 353.2 intra-day. The shares of ITC have returned over 47% in the last six months as calculated on the record high, beating the 36.49% rise in the Nifty FMCG index.
Today, after a series of large deals in ITC shares on both the exchanges, the company crossed Rs 4 trillion in market capitalisation, as investors continued to buy the stock after the government notified that cigarettes will be exempted of additional excise duty under the goods and services tax (GST) regime.
The massive surge in the stock prices of ITC is due to the cigarettes business, as the taxation on cigarettes under the new Goods and Services Tax (GST) is around 5%-6% lower than the previous tax structure, Reuters quoted a Reliance Securities analyst as saying. The government’s push to lower the tax structure is aimed at tackling large smuggling of cigarettes, the analyst added. A major portion of cigarettes sales remains unaccounted due to sales via unorganised channels.
The heavyweight consumer good stock, which is the largest FMCG company, is driving the benchmark Nifty FMCG up as much as 5.7% to an all-time high of 28,267.5 points. Other Cigarette stocks which rose on Monday includes VST Industry Ltd rising as much as 8.63%, Godfrey Phillips India is up 5.51% and Kothari Products Ltd is up 3.2%.