ITC share price: FII stake down 5% in 2026, targets ₹408

What is happening in ITC stock

ITC shares have remained in a downtrend this year, with sentiment hit by foreign selling and fresh policy risk around cigarette taxation. The stock has also faced broader market volatility, which has contributed to valuation corrections across sectors. In one market update, ITC was trading 2.35% higher at ₹311.60 during the session, even as the broader context remained weak. Another update showed ITC rising ₹1.35 or 0.42% to ₹326.10 on the NSE, after a previous close of ₹324.75. The variation in these snapshots reflects different trading days and market conditions, but the underlying theme across updates is the same: investors are reassessing earnings visibility, especially for the cigarette business.

The scale of the correction

The stock is down 26% over six months and 27% over one year, according to one data point cited in the coverage. It has also fallen 30% from its 52-week high of ₹444.15 recorded on May 27, 2025. Separately, another update noted the stock down 21% in three months and 27% in two years, underlining the prolonged pressure across timeframes. A report also highlighted that shareholders who held ITC since July 17, 2017, when the stock stood at ₹325.75, have seen near-zero returns over more than eight years, based on a reference close around ₹324.70.

Why sentiment turned weak

Multiple factors were cited as weighing on ITC stock. These include a slowdown in FMCG demand, a downcycle in the paper business, and valuation corrections amid ongoing market volatility. The most immediate trigger highlighted was the government’s significant hike in cigarette taxation, effective from February 1, 2026. One report said this new tax structure shaved off 14% from the stock on a year-to-date basis. The policy change also coincided with a sharp two-session move in the stock, with one update noting ITC lost more than 14% over two trading sessions after changes to the excise duty framework for cigarettes and related tobacco products.

Foreign investor selling and the ownership shift

A key overhang has been the waning interest of FIIs over the last year. FIIs pared their stake by about 5 percentage points, with FII holding falling from 39.87% at the end of the March 2025 quarter to 34.83% by the March 2026 quarter. Another ownership snapshot cited elsewhere put FII holding at 37.4% and DII holding at 47.5%.

A separate report also discussed the concentrated exposure of a large foreign investor. It said GQG Partners Emerging Markets Equity Fund held 263,434,398 shares (26.34 crore shares) of ITC, and after a 14% fall in the stock, its holding value was cited at ₹9,221.5 crore. The same report stated ITC accounted for over 25% weight in that portfolio.

Excise duty hikes and what brokerages flagged

Policy risk remains central because cigarettes are a key earnings driver for ITC. Centrum Broking estimated the tax increase at 35% to 55% depending on stick length for filter cigarettes, and said this would require MRP hikes of 20% to 35% to negate the tax incidence. Centrum also warned that such steep MRP hikes could result in a double-digit decline in cigarette volumes in FY27E, and it cut earnings estimates by 10% to 13% for FY27-28E while downgrading the stock from BUY to NEUTRAL.

On ratings changes, one report said Nuvama downgraded ITC from ‘buy’ to ‘hold’ and assigned a price target of ₹415, cut from ₹534. Japanese brokerage Nomura double-downgraded ITC to “reduce” from “buy” and pared its price target to ₹340 from ₹540.

Business fundamentals mentioned in the reports

Despite the stock correction, the coverage noted some fundamental supports. ITC was described as almost debt free. It was also reported to have a healthy net profit CAGR of 32.7 over three years.

Operationally, one brokerage note cited that ITC’s cigarette volumes rose 6.5% year-on-year, while its FMCG segment grew 11%, led by staples such as atta and biscuits in the third quarter of FY26. Separately, an analyst commentary clip cited FMCG profit growth of 42% in Q3, attributing it to operating leverage, and argued that FMCG performance forms a large part of the sum-of-the-parts view for ITC.

Technical picture: mixed signals across timeframes

The technical indicators cited across updates were not uniform. One update stated ITC shares were neither oversold nor overbought, with the RSI at 50. Another update described the stock as deeply oversold after excise duty hikes, with RSI at 16, well below 30.

Some technical levels were also referenced by market experts. A note said the ₹400 to ₹390 zone is a critical support area, while ₹416 to ₹420 is a resistance range that would need sustained buying to improve sentiment. Another view said a sustained breakdown below ₹405 could open downside towards ₹398 to ₹395.

Broader market impact: FMCG index dragged by ITC

The sharp move in ITC also affected the sector gauge. A report said the Nifty FMCG index slipped over 1% on a day when most other sectoral indices were positive, extending its two-day decline to more than 4% and hitting a nine-month low. The index touched an intraday low of 52,741.85, its weakest level since March 21, 2025, when it hit 52,670.60.

The same report cited spillover weakness in other consumer names. Radico Khaitan fell up to 3.55%, United Breweries declined nearly 1%, and stocks such as Nestlé India, United Spirits, Marico and Godrej Consumer Products slipped up to 1%. Godfrey Phillips India and VST Industries were also noted as being under pressure across the two sessions.

Key data points at a glance

Brokerage calls and price targets

Market impact and what investors are watching

Policy changes can reprice cigarette-led businesses quickly, and the reports stressed that pricing strategy and volume response will be crucial after the February 1, 2026 tax implementation. Investors are also tracking whether ITC can protect volumes through its pricing approach, which one brokerage described as a three-pronged strategy. Beyond cigarettes, market participants are watching the pace of recovery in FMCG demand and how the paper business downcycle evolves.

Conclusion

ITC’s correction has been linked to FII selling, weaker demand trends, and the near-term uncertainty from higher cigarette taxes effective February 1, 2026. Near-term direction will depend on management and brokerage assessments of price hikes, volumes, and margins, alongside ongoing market volatility.