ITC star of 'A' group

Revoking of excise duty on biscuits as well as on all food mixes, including instant mixes, was another reason for ITC’s rebound.

The ITC stock rose 4%, to settle at Rs 171.85. It was the top gainer in the 'A' group today. The stock rose on a high volume of 48.8 lakh shares on BSE.

Finance Minister P Chidambaram today proposed a complete exemption of excise duty on all instant food mixes and biscuits, whose retail price does not exceed Rs 50 a kilo. Besides being the top cigarette maker, ITC also makes biscuits and ready-to-eat food. Relief from excise duty for biscuits and ready-to-eat foods augurs well for the company. The Budget also proposed a cut in duty on food processing machinery to 5%.

The major driver of the stock’s surge was not bringing of cigarettes under value added tax (VAT). Though the excise duty on cigarette has been raised by 5%, it is reckoned that firms will pass on the hike to customers. The worst fears of the market were that cigarettes will be brought under value added tax with a 12.5% VAT, spawning concerns that higher tax may lead to a shift in tobacco consumption, to low-end products such as bidis and chewing tobacco.

Another food processing firm, Nestle India, surged 3% to Rs 970. It was the second highest gainer in the 'A' group today.

Oil refiner Chennai Petroleum Corporation (CPCL) rose 2.4% to Rs 194.90. It was the third biggest gainer in the 'A' group. The stock rose after the government today cut the ad valorem component of excise duty on petrol and diesel from 8% to 6%.

Gail (India) rose 2.3% to Rs 284. It was the fourth highest gainer in the 'A' group today. The stock edged up after the government extended income tax concession under Section 80 IA to gas pipelines.