Key Points:
- ITC share price dropped to ₹346–₹349 after India’s tobacco tax hike and analyst downgrades.
- Stock hits key long-term technical support, signaling possible further decline.
- Tax rise pressures margins, though diversified businesses may cushion the medium-term impact.
The ITC share price fell as much as five percent on Friday in Mumbai after India raised tobacco taxes, pushing the stock to its four-year monthly trendline near ₹350 and triggering analyst downgrades on earnings concerns.
Heavy Selling Pushes ITC to Long-Term Support
The ITC share price extended losses for a second session on Friday, sliding to a low of ₹346 on the National Stock Exchange amid sustained selling pressure. The decline follows a sharp sell-off on Thursday, when the stock dropped nearly 10 percent after the government announced a steep increase in excise duties on cigarettes.
The fall has brought ITC shares close to a key long-term technical level watched by investors. Charts show the stock trading near its four-year monthly Supertrend line for the first time since September 2021, a signal often viewed as a test of long-term trend strength.
At around 10 a.m., ITC was trading near ₹349, down more than four percent on the day. The stock has now erased a significant portion of its gains from the past year and is well below its 52-week high of ₹471.50.
Charts Signal Rare Technical Breakdown
Technical indicators suggest mounting weakness in the ITC share price. The monthly Supertrend line stands near ₹352, while the 50-month moving average is around ₹348.50, placing current prices directly at this combined support zone.
Analysts note that the stock has also been trading below its 20-month moving average for three consecutive months, a pattern last seen in December 2020. The longer-term 100-month moving average remains much lower, near ₹261, indicating room for further downside if selling pressure continues.
“The ITC share price is at a make-or-break level on long-term charts,” said a Mumbai-based technical analyst who tracks consumer stocks. “A sustained break below this zone could change the long-term trend.”
Market participants are closely watching whether ITC can hold above these levels in the coming sessions, as a decisive move lower may trigger additional institutional selling.
Tax Hike, Downgrades Deepen Earnings Fears
The pressure on the ITC share price intensified after the finance ministry notified a sharp increase in excise duties on cigarettes. Under the new rules, excise duty will range from about ₹2,050 to ₹8,500 per 1,000 sticks, depending on cigarette length, in addition to a 40 percent goods and services tax on tobacco products other than bidis.
The revised taxes will take effect Feb. 1, 2026, raising concerns about cigarette demand, margins, and near-term profitability for India’s largest tobacco company.
Several brokerages moved quickly to downgrade the stock. Prabhudas Lilladher cut its rating to “Reduce” from “Accumulate” and slashed its target price to ₹348 from ₹528. JP Morgan downgraded ITC to “Neutral” and lowered its target to ₹375 from ₹475.
“The tax hike is substantial and will impact cigarette demand,” said G. Chokkalingam, founder of Equinomics. He added that lingering fears of further stake dilution by British American Tobacco could add to downside pressure on the stock.
Religare Broking Research said ITC faces near-term margin and volume stress following the tax increase. However, it noted that the company’s pricing power and diversified businesses could help support earnings over the medium to long term.
Religare said it would reassess its earnings estimates and valuation once ITC outlines its pricing strategy and steps to offset the tax impact.
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