Cigarette Makers Drag Indian Equities Lower on Surprise Tax HikeBy
Sensex drops from record, slides most since December
ITC has biggest drop in 25 years after India raises tax
Declines in India’s cigarette makers, led by ITC Ltd., sent the nation’s benchmark stock index to its steepest decline in seven months.
The S&P BSE Sensex Index closed 1.1 percent lower, dropping from Monday’s record level. The benchmark has climbed to multiple fresh peaks this year as domestic and foreign investors bet on strong economic growth and improving sentiment on earnings results.
ITC tumbled 12 percent, the most since 1992, after the government raised levies on tobacco products. Smaller rival Godfrey Phillips India Ltd. slid 5.7 percent and VST Industries Ltd. dropped 8.2 percent.
“The broad market dragged lower due to the sharp cut in ITC,” Arjun Prajapati, assistant vice president at Asit C Mehta Investment Interrmediates Ltd., said by phone. “We expect stocks to rebound as ITC will pass on the price hike” to consumers, he said.
Seven of the 13 sector indexes compiled by BSE Ltd. declined, led by the S&P BSE Fast Moving Consumer Goods Index.
— With assistance by Nupur Acharya