Shares of ITC Ltd have witnessed a sharp selloff over the past two trading sessions following the government’s decision to raise excise duty on cigarettes, triggering heavy notional losses for large institutional investors, including state-owned insurers such as Life Insurance Corporation of India (LIC).
ITC stock fell as much as 5 percent on January 2, touching a fresh 52-week low of ₹345.25 on the NSE, before trimming some losses later in the session. The stock has declined over 14 percent in just two trading days of 2026, reflecting investor concerns over the potential impact of higher taxes on cigarette volumes and margins.
₹13,740 crore erosion in insurers’ portfolio
The sharp decline in ITC’s share price has resulted in a combined notional erosion of ₹13,740 crore in the portfolios of three state-run insurers over the two-day period.
As per ITC’s shareholding pattern for the July–September quarter of FY26, the company has no promoter holding, with 100 percent of its equity owned by public shareholders.
- LIC, which holds a 15.86 percent stake, is sitting on a notional loss of over ₹11,468 crore. The value of its holding has dropped to around ₹68,560 crore, from ₹80,028 crore as of the December 31 close.
- General Insurance Corporation of India (GIC), holding 1.73 percent, has seen a notional loss of about ₹1,254 crore.
- New India Assurance Company, with a 1.4 percent stake, has incurred a notional decline of roughly ₹1,018 crore.
These losses remain unrealised, as they would crystallise only if the insurers were to sell their holdings at current levels.
Market cap hit, stock recovers slightly
Despite the intraday low, ITC shares later recovered some ground to close about 4 percent lower at ₹350.10 on January 2. The stock is down over 13 percent in the past five sessions and more than 15 percent over the last six months.
The selloff has wiped out nearly ₹72,000 crore from ITC’s market capitalisation in just two days, which now stands at approximately ₹4.38 lakh crore. The stock is currently trading at a price-to-earnings (P/E) multiple of 22.59.
Meanwhile, shares of LIC ended nearly 1 percent higher at ₹861, while GIC closed marginally higher at ₹380, indicating limited spillover impact on the insurers’ own stocks.
Brokerages have turned cautious on ITC, warning that the higher excise duty on cigarettes could weigh on earnings growth and near-term sentiment.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Stock market investments are subject to market risks. Readers are advised to consult a qualified financial advisor before making any investment decisions.
