Key Points:
- Godfrey Phillips surged 13%, and ITC rose 5.6% after recent excise-led declines.
- Analysts call it a relief rally driven by short-covering and bargain hunting.
- Experts caution upside is limited, urging disciplined stop-loss strategies.
Shares of Godfrey Phillips India Ltd and ITC Ltd surged as much as 13 percent in Friday trading, rebounding from recent losses triggered by a government excise duty hike on cigarettes and sparking hopes of further short-term gains.
Godfrey Phillips jumped 13.02 percent to Rs 2,240.20, while ITC rose 5.65 percent to an intraday high of Rs 327.80, making both among the top gainers on the broader market.
Market participants attributed the sharp rise to a relief rally after heavy selling pressure in recent weeks. The government’s recent increase in excise duty on cigarettes had weighed on sentiment, prompting investors to cut exposure to tobacco stocks.
“Both stocks have witnessed a sharp decline in the recent past following the government’s excise duty hike,” said Ravi Singh, chief research officer at Mastertrust. “The current rise should be viewed as a relief rally after the steep correction.”
Singh said ITC could extend its upward move toward the Rs 340 level if momentum holds. However, he advised investors to maintain a stop loss at Rs 300 to manage downside risks.
On Godfrey Phillips, Singh said the stock has the potential to climb to the Rs 2,350–2,400 range in the near term, while recommending a stop loss at Rs 2,000.
“Investors looking for fresh buying in either of the stocks should consider entering on declines and strictly adhere to the suggested stop-loss levels,” Singh said.
Cigarette Stocks Rebound After Steep Recent Declines
Tobacco stocks have been under pressure since the Union government announced higher excise duties on cigarettes, raising concerns about potential volume impact and margin compression.
Analysts said Friday’s rally reflects short-covering and bargain hunting after valuations turned more attractive following the correction.
“Sentiment had become overly pessimistic,” said Jigar S. Patel, senior manager of technical research at Anand Rathi. “Some stabilization in prices is now leading to a bounce.”
Despite the sharp gains, experts cautioned that structural concerns tied to taxation and regulatory risks remain.
Analysts See Limited Near-Term Upside With Clear Risk Levels
Patel said ITC’s stock has immediate support at Rs 310, with resistance near Rs 330.
“A decisive move above Rs 330 could push the stock toward Rs 335,” he said. “The expected short-term trading range is between Rs 310 and Rs 335.”
For Godfrey Phillips, Patel sees support at Rs 2,000 and resistance at Rs 2,300.
“A decisive move above Rs 2,300 may trigger further upside toward Rs 2,400,” he said. “The expected trading range will be between Rs 2,000 and Rs 2,400 for the near term.”
Technical analysts said trading volumes increased alongside price gains, indicating active participation by short-term traders.
Experts Urge Caution, Prefer Buying on Dips
While near-term technical indicators suggest room for further upside, analysts emphasized the importance of disciplined risk management.
“The broader trend will depend on how the market digests the impact of higher excise duties on earnings in the coming quarters,” Singh said.
Longer-term investors may wait for clarity on demand trends and pricing strategies adopted by cigarette makers, he added.
For now, experts recommend a cautious approach, focusing on staggered buying during declines rather than chasing sharp rallies.
“Relief rallies can be swift but also short-lived,” Patel said. “Clear entry points and stop losses are essential in this environment.”
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