Shares in ITC gain 0.9 percent to 300 rupees, not far off a record high of 306.50 rupees hit on Dec. 12, 2012, as investors see previous fears of a potential duty on cigarettes as having dragged down the stock excessively.
Shares in the cigarette maker fell 11.7 percent in December on fears of tougher regulations on tobacco products.
Buying in defensive stocks this week on nervousness ahead of the RBI policy review on Tuesday also seen helping.
ITC shares have risen 3.5 percent this week, as of Thursday's close compared with a fall of 0.6 percent in India's BSE index.
ITC last week beat estimates with a 21 percent rise in quarterly profit as cigarette volumes improved after four quarters of stagnant growth.