ITC shares drag down Sensex to nearly 3-week lows

The benchmark Sensex today fell for the fourth straight session and ended about 74 points down at nearly three-week low levels as tobacco shares led by index heavyweight ITC slumped on fears of excise duty hike, amid concerns over rising crude on continued violence in Iraq.

Stock markets had opened on a better note with the 30-scrip BSE Sensex touching a high of 25,197.50 points in early trade on positive cues from other Asian markets.

However, it dipped below 25,000 mark for the first time since June 5 to touch day's low of 24,878.66 points on heavy selling. Some recovery in the fag-end helped Sensex narrow losses as ONGC, BHEL, Hero Motocorp and M&M shares gained.

The barometer closed with a loss of 74.19 points, or 0.30 per cent, to end at 25,031.32. The gauge has now lost over 489 points in the four sessions. Today's closing value is the lowest since 25,019.51 on June 5.

The 50-share Nifty of the NSE ended 18.10 points, or 0.24 per cent, down at 7,493.35 after shuttling between 7,534.80 and 7,441.60.

Scrips of Sensex heavyweight ITC tanked 6.5 per cent- its biggest single session fall since September 2013- reacting to reports there is a proposal to hike excise duty on cigarettes of all lengths. Godfrey Phillip and VST Industries slipped.

"We believe that, as proposed, if such a steep hike in excise duty is taken, cigarette volume growth for both ITC and VST Industries could witness a significant blow, impacting their revenues and margins," said brokerage ICICIdirect.com.

The FMCG sector index suffered the most by falling 4.06 per cent, followed by IT index that dropped 1.56 per cent after Infosys shares fell 2.55 per cent.

Sugar stocks clocked gains of up to 11 per cent after government decided to provide additional interest-free loan of up to Rs 4,400 crore to sugar mills and hike import duty.

"It was in the last half an hour session that some recovery was seen, taking the Nifty near 7,500 level. Sensex too managed to close at 25,000 level," said Nidhi Saraswat, Senior Research Analyst, Bonanza Portfolio.

Oil prices edged higher in Asia on continued violence in Iraq, but gains were capped. The West Texas Intermediate was up 39 cents to USD 107.22, while Brent crude gained 39 cents to USD 115.20 in afternoon trade.