Cess On Cigarettes Wipes Out Rs 48K Cr From Bse in 1 Day
The Goods and Services Tax Council’s decision to increase the cess on cigarettes triggered a sharp selloff in shares of tobacco companies with the ITC scrip falling by nearly 13 per cent on
Tuesday and investors losing nearly Rs 48,000 crore in a single day’s trading.
According to a report on moneycontrol.com, the total market capitalisation of ITC on the Bombay Stock Exchange (BSE) contracted from Rs 3,96,171.25 crore recorded on Monday to Rs 3,48,629 crore on Tuesday, which translates into a notional loss of Rs 47,542 crore. ITC which holds a weightage of 7.2 per cent in the Sensex was the biggest contributor to the decline in the index.
Other cigarette stocks Godfrey Phillips and VST Industries also tanked by up to 7.83 per cent.
After the GST Council raised the cess on cigarettes on Monday, many brokerages revised their estimates on the downside. The Foreign Portfolio Investors (FPIs) are among the major stakeholders in ITC, followed by insurance major LIC. FPIs hold 19.99 per cent stake in ITC as per shareholding data for the quarter ended June, followed by LIC which holds 16.25 per cent and financial institutions or banks which have 9.18 per cent stake.
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