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Indian equities plunge as cess on cigarettes depresses ITC stocks (Lead)

Mumbai, July 18 (IANS) After a day of trading at a record high, the Indian equity markets on Tuesday were subdued by a heavy lag in FMCG major ITC stocks, coupled with negative global cues and profit booking.

According to market analysts, the key equity indices were dragged lower by a free fall witnessed in the stocks of the largest FMCG company ITC, following which the S&P BSE FMCG index plunged by 637.54 points or around 6 per cent (at 1.00 p.m.).

The plunge in the stocks of the blue chip firm followed the increasing of compensation cess rates on cigarettes by the GST Council on Monday in view of the reduction in tax on the demerit good under the new indirect tax regime.

The shares of the bluechip firm fell by 12.29 per cent or Rs 40.05 to trade at Rs 285.70 per share.

At 1.00 p.m., the wider Nifty of the National Stock Exchange (NSE) fell by 67.85 points, or 0.68 per cent, to trade at 9,848.10 points.

The 30-scrip Sensitive Index (Sensex) of the BSE, which opened at 31,775.54 points, traded at 31,789.46 points — down 285.32 points, or 0.89 per cent, from the previous close at 32,074.78 points.

The Sensex has so far touched a high of 31,911.61 points and a low of 31,626.44 points during intra-day trade.

The BSE market breadth was bearish with 1,376 declines and 1,093 advances.

“Equity markets opened lower and continued to fall in morning trade, with the Nifty struggling to trade above 9,900. The BSE Sensex opened lower against the previous session’s closing,” Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.

“The shares of Bharti Airtel, Sun Pharma and NTPC rose, whereas the shares of ITC and Reliance Industries (RIL) fell. ITC fell 13 per cent to Rs 282.65 after most of the brokerage downgraded the stock and also cut its target price after government increased cess on cigarettes,” Desai added.

On Monday, the benchmark indices edged up to close at a fresh high as sentiments were boosted by the onset of quarterly results and Parliament’s monsoon session.

The Nifty closed at a new high of 9,915.95 points after touching a record high of 9,928.20 points intra-day.

The Sensex also closed at a new high of 32,074.78 points. It scaled a fresh intra-day high of 32,131.92 points.

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