ITC plunges 13 per cent, pulls Sensex down by 364 pts

The Nifty opened lower at 9,832.70, and after touching an intra-day high of 9,885.35, the index headed south to touch a low of 9,792.05, before finally settling at 9,827.15, down by 88.80 points, or 0.90 per cent. ITC emerged as the worst performer after its stock dived 12.63 per cent to Rs 284.60 following the GST Council’s decision to hike cess on cigarettes by 48.50 paise to 79.20 paise per stick. Other cigarette stocks were Godfrey Phillips and VST Industries also plunged by up to 7.83 per cent. Cigarettes now attract 28 per cent GST.

The sentiment was also impacted by mixed global cues as setbacks for a healthcare overhaul in the US raised doubts over prospects for a range of reforms backed by US President Donald Trump. “GST cess on cigarettes dented Nifty’s surge, while global markets and the uncertainties prevailing around the earnings season kept the domestic investors cautious today. However, strength in rupee and recovery in the PSU bank stocks amidst NPA resolution hopes, shall keep 10k aspirations alive,” Anand James, chief market strategist, Geojit Financial Services Ltd, said.

Nitasha Shankar, head of research, YES Securities, said, “Profit booking drove benchmark indices lower, snapping six days of gains. Further, selling pressure accentuated in late trade after Nifty Index witnessed a breakdown from a rising channel support line. Moreover, volumes picked up in the correction suggesting a temporary pause in the uptrend. Boarder markets also corrected in line with the headline Indices.”

“Despite subdued global cues, Tuesday’s gap down opening (in Nifty) was mainly on the back of index heavyweight ‘ITC’ tumbling more than 10 per cent in the pre-opening session. We saw some attempt of recovery in Nifty in the midst of the session; but, rub off effect (of ITC) was being witnessed on the broader market in the latter half, which eventually pulled the index below 9850 on a closing basis,” said Sameet Chavan, chief analyst -technical and derivatives, Angel Broking. Cautioning investors, Chavan said, in the last few days, we witnessed a smart rally in index after breaking previous hurdle of 9710. However, we maintained our cautious stance on the market and have been advising booking profits in this rally. Today’s surprising gap down opening followed by some correction seems to have justified our view to some extent. As mentioned previously also, correction in a euphoric market generally surprises us and then it becomes very difficult to exit our existing longs as the velocity of such corrective moves can be threatening.