Shares of cigarette makers fell on Saturday after Finance Minister Arun Jaitley raised excise duty on cigarettes by 25 per cent for cigarettes of length not exceeding 65 mm.
In his Budget speech on Saturday, the finance minister also raised excise duty to 15 per cent for cigarettes of other lengths.
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Shares of ITC slumped 7.3 per cent while VST Industries lost 3 per cent.
Although cigarette demand is relatively inelastic, analysts have said higher taxes would hurt volume growth and force companies to diversify faster.