In what appears to be a classic case of flattering to deceive, shares of cigarette companies, which flared up under the impression that these companies will be spared of any duty hike, crashed after it became clear that the Union Finance Minister had proposed a sharp hike in duty on cigarettes linked to their size.

In fact, ITC shares zoomed to a new 52- week high only to come down later losing more than 8 per cent after the market digested the extent of the hike.

Arun Jaitley hiked the excise duty by 25 per cent on cigarettes up to 65mm in length and by 15 per cent on cigarettes that were more than 65mm in length. Excise duty on tobacco was hiked to ₹70 per kg from ₹60 per kg.

The announcement took a toll on cigarette stocks. ITC shares shed ₹33.85 to slip to ₹359.85 after market realised that the budget had hiked the tax on cigarettes. The stock had reached a new high of ₹409.95 before it started its downward journey.

Godfrey Phillips India Ltd went down from a high of ₹534.40 to ₹474.95. VST Industries was another tobacco related stock to be hit. The stock shed ₹64.85 to trade at ₹1,679.85. The stock had touched a high of ₹1,819.90 before starting to go down.

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