ITC Shares Surge After Budget Announcement

On Tuesday, the stock market received a refreshing boost as ITC‘s share price soared more than 5%. This surge came in the wake of Finance Minister Nirmala Sitharaman‘s address during the budget announcement, which notably did not include any changes to tobacco taxation.

Investors were relieved to see that the tax rates remained unchanged after last year’s significant 16% hike in National Calamity Contingent Duty (NCCD). As a company that heavily depends on its cigarette sales for revenue, this news gave ITC a strong lift. The stock’s performance made it stand out not just among others but also marked it as one of the top performers on benchmark indices, including the Nifty 50 and Sensex.

ITC opened at ₹467.05 on the Bombay Stock Exchange (BSE) and impressively reached an intraday high of ₹489.80. The stock’s low for the day was recorded at ₹466.55, signifying a robust interest from investors. This activity coincided with Nifty FMCG also performing well, gaining about 2.7%, with ITC leading this specific category.

According to market analyst Ruchit Jain from 5paisa, the upward trend of ITC’s share price signals positive momentum, especially as it has been accompanied by substantial trading volumes. He emphasized that the immediate support level for the stock is around ₹460, recommending careful monitoring.

In addition to the tobacco-related news, there are other factors at play that could benefit ITC in the coming months, especially regarding rural demand. The Finance Minister’s budget has aimed to bolster rural allocation by 12%, which could positively impact the non-tobacco sectors of ITC’s business, particularly in FMCG and agricultural products.

T Manish, a research analyst at SAMCO Securities, also weighed in on the implications of the new tax regime introduced in the budget. He pointed out that the revised tax rates, coupled with the increase in standard deduction from ₹50,000 to ₹75,000 for taxpayers opting for the new regime, are set to provide a significant boost to individuals. This change is expected to bring net tax savings of around ₹17,500 for individual taxpayers, which can, in turn, drive higher consumer spending in the FMCG sector.

With the potential for increased disposable income, major FMCG companies like ITC, HUL, Dabur, and Nestle are expected to see some direct benefits. As consumer sentiment improves, analysts are optimistic about the performance of FMCG stocks, indicating a trend towards relative outperformance in the near future.

Investors are keenly watching these developments, as they influence market sentiments and decisions. With ITC positioned strongly and several favorable market conditions, the next few quarters could see the FMCG sector thriving, with ITC likely at the forefront of this growth wave.

Overall, the budget announcement has set a refreshing tone for ITC and other FMCG companies, bringing with it a hopeful outlook for a sector that significantly contributes to the economy. The market’s reaction also reflects a broader confidence in the government’s strategies to support industry dynamics despite the ongoing challenges faced in the broader market landscape.