The Nifty FMCG index plunged more than 3% on Jan 1, touching its lowest level in nine months, after ITC’s shares crashed 10% when the government announced higher excise duties on cigarettes.
Why ITC Shares Tumbled
The Parliament approved a new Central Excise (Amendment) Bill that replaces the temporary levy on tobacco products with a permanent excise duty. Starting Feb 1, an additional duty of ₹2,050‑₹8,500 per 1,000 sticks will be charged, on top of the existing 40% GST. Analysts say this raises the total cost of 75‑85 mm cigarettes by 22‑28%, which could push prices up by ₹2‑₹3 per stick. The higher cost outlook sent ITC’s stock down to ₹362.70, making it the biggest loser on both the Sensex and Nifty.
Impact on Other FMCG Stocks
The tax news also weighed on several other consumer‑goods companies. The main losers and gainers were:
- Losers:
- United Spirits – down ~3%
- Radico Khaitan – down >1%
- Tata Consumer Products – down ~1%
- Dabur India – down ~1%
- Emami – down ~1%
- United Breweries – down ~1%
- Hindustan Unilever – small loss
- Britannia Industries – small loss
- Gainers:
- Varun Beverages – modest gain
- Nestle India – modest gain
- Marico – modest gain
- Colgate‑Palmolive – modest gain
- Godrej Consumer Products – up 1%
- Patanjali Foods – up 1%
What Retail Investors Should Watch
Investors with exposure to FMCG stocks may want to monitor how the new excise duty affects pricing strategies and profit margins, especially for companies with a significant share of longer‑size cigarettes. Keep an eye on earnings updates and any further policy announcements that could shift consumer demand.
Disclaimer
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.