{"id":19515,"date":"2026-01-06T17:27:12","date_gmt":"2026-01-06T11:57:12","guid":{"rendered":"https:\/\/trending.niftytrader.in\/?p=19515"},"modified":"2026-01-06T17:27:12","modified_gmt":"2026-01-06T11:57:12","slug":"itcs-2026-decline-deepens-with-2-fall-analysts-debate-if-the-dividend-stock-has-found-a-floor","status":"publish","type":"post","link":"https:\/\/www.niftytrader.in\/markets\/itcs-2026-decline-deepens-with-2-fall-analysts-debate-if-the-dividend-stock-has-found-a-floor\/","title":{"rendered":"ITC\u2019s 2026 Decline Deepens with 2% Fall; Analysts Debate if The Dividend Stock Has Found A Floor"},"content":{"rendered":"

ITC Shares Extend Sharp Selloff as Excise Duty Hike Triggers Heavy Liquidation<\/p>\n

Shares of ITC<\/span><\/span> fell more than 2 percent on January 6, extending a steep decline to nearly 15 percent in just four trading sessions. The stock slipped to a fresh 52-week low of \u20b9337.75 before recovering marginally to close at \u20b9343.25. The sharp fall has erased close to \u20b982,000 crore in market capitalisation over four days, marking one of the most aggressive selloffs seen in the stock in recent years.<\/p>\n

The sustained weakness comes after the government cleared a sharp hike in cigarette excise duties, triggering fears of margin pressure, price-led volume contraction, and earnings downgrade risks. Despite ITC\u2019s reputation as a defensive, dividend-paying stock, bearish momentum has dominated near-term sentiment.<\/p>\n

New Cigarette Excise Duty Sparks Market Anxiety<\/h2>\n

The key trigger behind the fall was the approval of the Central Excise (Amendment) Bill, 2025 by Parliament in December. The move replaces a temporary levy with a permanent excise duty on cigarettes and tobacco products, imposed over and above the existing 40 percent GST.<\/p>\n

The finance ministry has notified excise duties ranging between \u20b92,050 and \u20b98,500 per 1,000 sticks, depending on cigarette length, effective February 1. Analysts at ICICI Securities<\/span><\/span> estimate this translates into a 22\u201328 percent increase in overall costs for cigarettes in the 75\u201385 mm category.<\/p>\n

\u201cCigarettes longer than 75 mm account for roughly 16 percent of ITC\u2019s volumes and are likely to see price increases of \u20b92\u20133 per stick as a result of the levy,\u201d ICICI Securities said, adding that the extent of volume elasticity will be crucial to watch.<\/p>\n

Also Read : Groww Shares Trade Marginally Higher On Motilal Oswal\u2019s 19% Upside Call<\/a><\/p>\n

Dividend Comfort Collides With Regulatory Risk<\/h2>\n

ITC has long been viewed as a safe haven stock due to its consistent dividend payouts. In FY25, the company declared a total dividend of \u20b914.35 per share, translating into a dividend yield of about 4.10 percent as of January 6, 2026.<\/p>\n

However, analysts caution that while dividends offer downside comfort, regulatory shocks to the core cigarette business can overwhelm income-led buying in the short term. The cigarette segment remains ITC\u2019s biggest profit contributor, and any sustained hit to volumes or margins could limit future cash flow flexibility.<\/p>\n

Technical Charts Signal Heavy Damage, Key Levels in Focus<\/h2>\n

From a technical perspective, analysts say the stock remains under pressure. Siddharth Maurya, Founder and Managing Director at Vibhavangal Anukulakara<\/span><\/span>, said ITC is trading below all crucial moving averages, keeping bearish momentum intact.<\/p>\n

\u201cThe initial support is placed near \u20b9328, while resistance is seen around \u20b9388\u2013390. A close above resistance could trigger a recovery phase, but a decisive break below \u20b9328 may intensify the negative trend,\u201d Maurya said.<\/p>\n

The stock\u2019s failure to hold long-term support zones has dented near-term technical confidence, even as oversold indicators start flashing.<\/p>\n

Capitulation Signals Emerge as Volumes Surge<\/h2>\n

Some market experts believe the ferocity of the selloff could signal exhaustion rather than the start of a prolonged downtrend. Darshan Rathod, Director and COO of Multyfi<\/span><\/span>, said ITC\u2019s collapse after the cigarette tax hike triggered \u201cone of the most violent single-day liquidations in recent memory\u201d.<\/p>\n

\u201cVolumes surged to nearly 30 times the daily average, a classic capitulation signature that often marks exhaustion bottoms rather than sustained declines,\u201d Rathod said.<\/p>\n

He added that the breach of the \u20b9375\u2013380 multi-year support and the plunge to \u20b9342 has pushed the stock about 15 percent below its 200-day SMA, marking the deepest oversold condition since the COVID crash.<\/p>\n

Derivatives Data Suggests Market May Be Overcrowded on Shorts<\/h2>\n

Rathod highlighted that while call writing at \u20b9350 reflects near-term bearishness, the derivatives setup presents a more nuanced picture. \u201cThe Put\/Call ratio at 0.61 and heavy put accumulation at \u20b9340\u2013330 strikes suggest smart money may be building safety nets rather than chasing further downside,\u201d he said.<\/p>\n

According to him, \u20b9340 is the immediate pivot level. A recovery above \u20b9360 with normalising volumes could confirm stabilisation, while sustained trade below \u20b9335 may open the door to \u20b9310\u2013300 levels. A true trend reversal, however, would require the stock to reclaim \u20b9400 decisively.<\/p>\n

Bearish Camp Advises Caution Despite Oversold Signals<\/h2>\n

Not all analysts are convinced a bottom is in place. Drumil Vithlani, Technical Research Analyst at Bonanza<\/span><\/span>, warned that downside momentum could continue.<\/p>\n

\u201cThe stock is in a clear downtrend and is trading below all major EMAs of 20, 50, 100 and 200. The RSI at 22.96 indicates oversold conditions, but oversold does not automatically mean reversal,\u201d he said.<\/p>\n

Vithlani added that the earlier support near \u20b9380 has now turned into a strong resistance zone, while the next major support lies near \u20b9310. He advised investors to avoid fresh entries until clearer signs of trend stabilisation emerge.<\/p>\n

Broker Downgrade Adds to Pressure<\/h2>\n

Adding to the cautious outlook, Macquarie<\/span><\/span> has downgraded ITC to \u2018Neutral\u2019 from \u2018Buy\u2019 and slashed its target price by 34 percent to \u20b9330, implying further downside from recent levels. The downgrade reflects concerns over earnings visibility and regulatory overhang following the excise hike.<\/p>\n

Bottoming Out or Value Trap? What Investors Should Watch<\/h2>\n

Analysts agree that ITC is at a critical juncture. While dividend yield and oversold technicals offer comfort to long-term investors, near-term risks remain elevated due to regulatory uncertainty and fragile sentiment.<\/p>\n

Key factors to track going forward include:<\/p>\n