ITC Stock Plummets 18% in 20-Year Low Amid Tax Blow

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AuthorVihaan Mehta|Published at:
ITC Stock Plummets 18% in 20-Year Low Amid Tax Blow
Overview

ITC shares are in freefall, poised for their worst monthly performance in two decades. The stock has plunged 18.3% in January 2026 following a significant tax increase on cigarettes. Analysts warn of further declines, with some projecting a drop to the ₹300 level, citing bearish technical patterns and F&O data indicating sustained downward pressure.

The sell-off in ITC stock intensified this January, marking a grim milestone. Shares have plummeted 18.3% in the first half of the month, putting the company on track for its most substantial monthly loss in approximately 20 years. This steep decline follows the government's notification of a new tax structure for tobacco products on December 31, 2025, including a GST rate hike on cigarettes from 28% to 40%, effective February 1, 2026.

Technical Breakdown and Analyst Outlook

The daily chart reveals ITC trading below key moving averages, confirming a breakdown below its crucial ₹380 neckline. Sacchitanand Uttekar of Tradebulls Securities forecasts a corrective decline towards the ₹300 zone, indicating an almost 9% downside from current levels. He notes the stock has been in a corrective structure since July 2023, with the ₹300 mark as a projected termination area. While Uttekar anticipates a temporary relief rally towards ₹345-₹350, he cautions that a sustained break above ₹375 resistance is needed to alter the bearish trend.

Deeper Bearish Signals

Dhupesh Dhameja of SAMCO Securities paints an even starker picture, projecting a potential 19.5% drop, targeting levels around ₹265. He highlights a confirmed Head-and-Shoulders breakdown below the ₹380 support, with the pattern's measured move aligning with the ₹200-month moving average near ₹250-₹260. Despite oversold momentum indicators suggesting scope for minor short-covering bounces, Dhameja expects strong supply pressure around the ₹340-₹350 range.

Options Market Sentiment

Further reinforcing the bearish outlook, F&O data reveals a Put Call Ratio (PCR) of 0.33, indicating dominant call positioning and suggesting tactical bounces rather than a durable reversal. The price-open interest structure shows significant fresh short build-up, with open interest expanding despite price declines. Aggressive call writing at the 340 and 350 strikes caps near-term upside, while put open interest is concentrated at ₹330 and ₹320. A decisive break below ₹320 could accelerate selling pressure towards the critical ₹300 level.

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