ITC falls 2%, extends 2026 losses to 15%: Has the 'dividend' stock bottomed out? Here's what analysts say

ITC share price

• ITC shares fell over 15 percent in four days after new excise duty on cigarettes
• Stock hit a 52-week low, erasing Rs 82,000 crore in market cap
• Analysts advise caution as bearish momentum and technical weakness persist

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The shares of ITC dropped more than 2 percent on January 6, extending losses to 15 percent in four sessions after government imposed new excise duty on cigarettes. Analysts noted that the bearish momentum continues to prevail, while listing out key levels to watch out for possible recovery.

The shares of the hotels-to-cigarettes conglomerate dropped to a fresh 52-week low of Rs 337.75 apiece. This takes the total market cap erosion to Rs 82,000 crore in just four days. The stock later recovered some losses to close at Rs 343.25 apiece.

ITC is widely-regarded as a safe stock to hold considering its dividend-paying history. In FY25, ITC declared and paid a total dividend of Rs 14.35 per share. As of January 6, 2026, the company's dividend yield is approximately 4.10 percent.

Why are ITC shares falling?

The Parliament in December approved the Central Excise (Amendment) Bill, 2025, clearing the way for a sharp increase in duties on cigarettes and other tobacco products. It replaces a temporary levy on cigarettes and tobacco products.

The excise duty would be imposed on cigarettes in addition to a 40 percent GST, according to an order issued late on Wednesday. The finance ministry notified that an excise duty of Rs 2,050–8,500 per 1,000 sticks, depending on cigarette length, will take effect from February 1.

The duty translates into a 22-28 percent increase in overall costs for 75-85 mm cigarettes, analysts at ICICI Securities said. "Cigarettes longer than 75 mm account for roughly 16% of ITC's volumes and are likely to see price increases of 2–3 rupees per stick as a result of the levy," they said.

ITC technical view:

The stock is continuing to trade under pressure as it is kept below the crucial moving averages, with bearish momentum prevailing, said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara.

The analyst added that the initial level of support is seen around Rs 328, while the resistance can be noted at Rs 388-390. "A close above the resistance mark might trigger the recovery phase; however, a close below Rs 328 might result in intensification of the negative trend,” he further said.

ITC's collapse following the 40 percent cigarette tax hike has triggered one of the most violent single-day liquidations in recent memory, with volumes surging to 30 times the daily average - a classic capitulation signature that often marks exhaustion bottoms rather than the beginning of sustained declines, said Darshan Rathod, Director and COO of Multyfi.

'Technical damage is severe yet...'

"The technical damage is severe yet paradoxically constructive for contrarians. The breach of ₹375-380 multi-year support and subsequent plunge to ₹342 has pushed the stock 15% below its 200-day SMA. On the monthly timeframe, this represents the deepest oversold condition since the COVID crash, with the stock now trading at a 15% monthly decline… The derivatives landscape tells a nuanced story. While Call writing at ₹350 reflects near-term bearishness, the Put/Call ratio of 0.61 and total Put OI of 7.71 crore versus Call OI of 12.54 crore suggests the street may be overly positioned for downside. The heavy Put accumulation at ₹340-330 strikes indicates smart money establishing safety nets,” he added.

Rathod explained that in the near-term, Rs 340 becomes a key level to watch out for. Reclaiming Rs 360 with normalizing volumes would confirm stabilization, while sustained trade below Rs 335 risks extension toward Rs 310-300, though genuine trend reversal requires reconquest of Rs 400, he said.

'Downside momentum to continue, avoid fresh entries':

Drumil Vithlani, Technical Research Analyst at Bonanza, said that the stock is clearly showing strong bearish sentiment. “The stock is now in a downtrend and is trading below all major EMAs of 20, 50, 100, and 200, confirming weakness on the weekly timeframe. The RSI stands at 22.96, indicating an oversold zone; however, its 14-day RSI average is near 42.8, suggesting that any short-term cool-off in RSI may not translate into a sustainable reversal,” he said.

The analyst expects the downside momentum to continue, and advised investors to avoid fresh entries. “The earlier support at 380 now acts as a strong resistance zone, while the next major support is placed near the 310 level,” he said.

Macquarie has downgraded the stock to 'Neutral' from 'Buy', and slashed its target price by 34 percent to Rs 330 apiece, NDTV Profit reported. The latest target price implies a downside potential of around 6 percent from the stock's previous closing price.

ITC’s trend has weakened meaningfully following a sharp breakdown from the crucial support zone around the Rs 400 level, said Ajit Mishra – SVP, Research, Religare Broking. The stock has decisively slipped below the 100-week moving average, with a strong bearish candle accompanied by a spike in volumes, indicating distribution rather than routine profit booking, he added.

"Momentum indicators have deteriorated, as the RSI has drifted towards the 50 zone and the stochastic oscillator has entered a bearish crossover, pointing to further downside risk. Immediate support is placed in the ₹330–340 zone, which remains a critical medium-term support area. A sustained break below this band could open the door for a deeper corrective move towards the ₹300 mark. On the upside, any recovery attempt is likely to face initial resistance near ₹360, followed by a major hurdle around ₹390. Participants are advised to avoid aggressive positioning at current levels and wait for clear signs of consolidation or stabilization," he further said.