Shares of ITC shot up around 5% to reach the 52-week high of ₹384.40 on Thursday. 

What Happened: Nirmala Sitharaman announced a 16% hike in national calamity contingent duty (NCCD) on cigarettes in her budget speech. This led to cigarette company stocks seeing a brief downward trend, as the hike would mean cigarettes getting expensive.

However, the stocks of cigarette companies bounced back as analysts noted that the price hike would be nominal. Analysts at ICICI Direct said that the net tax on cigarettes would increase by ₹0.07/stick to ₹0.12/stick. It observed that this tax hike "would be easily passed on by a small increase (1-3%) in prices."

However, a report in the Informist cited sources saying that companies such as ITC Ltd, Godfrey Phillips India Ltd, and VST Industries may not consider hiking the prices, especially in the low-end segment.

See Also: Gautam Adani In 1st Comment Since Short Seller Allegations Says Going Ahead With FPO Felt ‘Morally Incorrect’

Market experts also observed that the hike was much lower than what was expected and thus remain a positive for the stocks. 

Price Action: Here is how cigarette company stocks fared in the early hours of trading on Thursday.

Shares of ITC were up 5.67% at ₹381.95.

Godfrey Phillips India Limited traded 2.24% higher at ₹1,862.

NTC Industries Ltd was up 2.41% to trade at ₹87.20

Shares of Golden Tobacco Ltd were up 2.06% at ₹62.05. 

VST Industries Limited traded 2.2% higher at ₹3,021.25.

Read Next: Domino’s, Dunkin’ Donuts Operator Jubilant Sees Shares Crash Over 6% After Q3 Results