Cigarette stocks puff more than smoke

Cigarette stocks are doing well today. ITC is currently up over 4% at Rs.377.60, VST is up almost 2.5% at Rs.1916 and Godfrey Phillips is up the best – over 6% at Rs.625.10 with volumes surging over 4 times.

These tobacco company stocks are up with unconfirmed news reports emerging that the Govt is unlikely to ban the earlier proposed loose cigarette sales, at least in the immediate couple of months. This conclusion has been arrived at as it is most likely that the Winter Session of the Parliament will not be able to pass the amendment to these tobacco products. And instead of just imposing a ban, the news is that health and agriculture ministers will first conduct a study on the issue, take feedback from tobacco farmers and only then decide on the action needed. It has dawned late on the ministry that before imposing any ban, they need to consider the plight of the tobacco farmers, whether it would affect their livelihood and if it does, do they have an alternate to fall back upon.

Thus the market is celebrating that Cigarette & Other Tobacco Products Act (COPTA) has been postponed for now.