Shares of cigarette companies rebound on ban rethink

Shares of cigarette companies, led by the ITC, soared on Thursday on reports that the government was reconsidering a proposal to ban sale of loose cigarettes. Last week, the government had accepted a tougher framework for the sale of tobacco following which shares of cigarette companies had crashed.

Most companies recouped the losses on news that the new guidelines are facing opposition from some lawmakers and farmers associations. Shares of ITC gained 5.4 per cent to Rs 382.75, a six-month high. Other cigarette companies, including Godfrey Phillips and VST Industries rose five per cent and two per cent, respectively.

Analysts had said the proposed ban by the government would have dented topline of cigarette companies as loose cigarettes account for over 70 per cent of the sales.