Budget Bombshell: ITC Shares Skyrocket Amidst Taxation U-Turn

Budget Bombshell: ITC Shares Skyrocket Amidst Taxation U-Turn

ITC Share Price Rises After Budget Announcement

On Tuesday, ITC’s share price surged by more than 5%. This increase came right after Finance Minister Nirmala Sitharaman delivered her budget speech without changing tobacco taxation. This decision relieved companies like ITC and its investors, who depend heavily on cigarette sales for revenue.

Steady Rates and Market Performance

The tobacco tax rates remained unchanged following a 16% hike in the National Calamity Contingent Duty (NCCD) last year. In response, ITC emerged as one of the top performers on both the Nifty 50 and Sensex indices.

Trading Day Highlights

At the beginning of the trading day, ITC opened at ₹467.05 per share on the BSE. Throughout the day, its stock reached an intraday high of ₹489.80 per share and a low of ₹466.55. The broader Nifty FMCG index also saw a 2.7% gain, with ITC leading the index.

Expert Insights and Market Outlook

According to Ruchit Jain from 5paisa, ITC’s stock has shown recent upward movement with solid trading volumes, indicating positive market sentiment. He highlighted that the stock has immediate support of around ₹460, a price level at which a stock is expected to stop falling and start rising due to a high number of buy orders.

Jain also pointed out that the overall trend for the FMCG sector looks positive, with stocks in this segment showing robust price and volume actions. He expects FMCG stocks to outperform shortly, instilling a sense of optimism and hope in the market.

Factors Driving ITC’s Growth

Another favorable factor for ITC is the expected increase in rural demand, which would benefit its non-tobacco businesses such as FMCG and Agri. The Finance Minister’s budget allocation for rural development was increased by 12%, further boosting optimism.

Impact of Budget Proposals

The budget also introduced revised tax rates and increased standard deductions, which benefit FMCG companies. This includes a higher standard deduction of ₹75,000 under the New Tax Regime, potentially leading to significant tax savings for individuals and corporations.

Market Dynamics and Performance

While the Nifty 50 index saw a slight decline of 0.12%, some sectors and specific stocks performed notably well. Titan, for instance, saw a significant rise of 6.53% following the budget’s proposal to reduce essential customs duty on gold and silver.

Conclusion and Market Sentiment

While some sectors experienced declines, the market sentiment remains cautious yet hopeful. Analysts suggest sustaining corporate growth will be crucial amidst ongoing economic dynamics and market fluctuations, providing readers with a balanced and informed perspective.

Technical Analysis and Future Outlook

From a technical standpoint, analysts like Rupak De from LKP Securities noted a corrective phase in the market, indicating potential short-term weakness. However, the outlook remains optimistic, with support and resistance levels identified for market participants to watch.

By summarizing these insights into human-readable segments with clear headings, the complex dynamics of market movements and budget impacts become more accessible and understandable to the general reader.