ITC Stock Dips Amid Tax Hike: Why Smart Investors See a Golden Opportunity

The tweet by @MarketAlpha24 (Post ID: 2006707047073722490) on January 1, 2026, at 12:40 UTC highlighted a crucial moment for ITC Ltd. Investors panicked after news of India’s 30%+ tobacco tax hike, effective February 1, 2026, yet the tweet suggests this dip is a golden long-term opportunity rather than a reason to sell.

Don’t panic on headlines.

Cigarette demand doesn’t fall with price — it’s addiction-driven.

ITC dip = golden long-term opportunity.

Accumaltion zone: ₹365–320
Upside Potential: ₹1,000–1,200
Timeframe: 2–3 yrs#StockMarketIndia #IndianMarkets #StocksToBuy #ITC #itcshare… pic.twitter.com/YeOgYCTISC

— Market Alpha (@MarketAlpha24) January 1, 2026

Understanding the Dip

ITC’s stock dropped sharply to ₹363.85, near its support zone of ₹365–320, following headlines about the tax hike. The company’s cigarette segment drives significant revenue, and while higher taxes may impact margins, addiction-driven demand for cigarettes often remains resilient.

The TradingView charts attached in the tweet reveal:

1. Weekly Chart (2017–2026): A red-shaded support zone around ₹347–364, indicating a potential accumulation range.
2. Long-Term Trendline (projected to 2029): Suggests a gradual upward trajectory, supporting future price targets of ₹1,000–1,200 over 2–3 years.

Why Investors Are Watching

• Addiction-Driven Demand: Cigarette consumption historically remains stable despite price hikes.
• Intrinsic Value: ITC’s estimated intrinsic value is ₹546.34, highlighting undervaluation.
• Diversification: Non-tobacco segments, including FMCG and hotels, can offset revenue dips.

Risks to Consider

• Regulatory crackdowns or stricter WHO guidelines could reduce demand over time.
• Margin compression from higher taxes could cap short-term upside.
• Young consumers may shift to alternative products, slowly impacting cigarette volumes.

Expert Opinions

• Bullish: Some investors see the dip as a perfect buying opportunity, aiming for ₹1,000+ in 2–3 years.
• Cautious Optimism: Others target ₹600 first, considering the immediate tax impact.
• Bearish: Some warn that margins will shrink, predicting stagnation around ₹300–350.
• Technical Focus: Traders watch ₹320 support closely, planning to buy if the stock holds.

A Positive Outlook Amid Challenges

While taxes are a short-term headwind, historical trends and technical analysis suggest a long-term recovery is possible. Smart investors may accumulate within ₹320–365 and gradually aim for a conservative target of ₹600–700 over 2–3 years. A stop-loss below ₹300 can mitigate risks.

This scenario highlights a critical lesson: fear in headlines can create opportunities for those who analyze facts, trends, and fundamentals carefully. ITC’s dip is not just a negative event; it is a chance for disciplined, long-term investors to benefit from market corrections.

FAQs

Q1: Is ITC stock a safe buy after the tobacco tax hike?

A1: ITC’s stock remains undervalued, with addiction-driven demand providing stability. Accumulating in ₹320–365 may be wise for long-term gains, but regulatory risks exist.

Q2: What are the expected targets for ITC stock?

A2: Analysts project ₹1,000–1,200 over 2–3 years, though a conservative target of ₹600–700 may be more realistic considering taxes.

Q3: How does the tax hike impact ITC?

A3: The 30%+ excise duty increase may reduce margins short-term, but cigarette demand historically remains inelastic, and non-tobacco segments can offset revenue dips.