About 4.4 million ITC shares were sold at 435 rupees each, a 7.6% premium to the stock's closing price on Tuesday, per LSEG data, in a block trade worth 1.91 billion rupees (about $23 million).

ITC's shares jumped as much as 8.3%, before easing to trade up about 6% at 429.8 rupees, on track for their largest intraday jump since mid-September, 2021. They were the top gainer on the blue-chip Nifty 50 index, which was down 0.2%.

BAT, the maker of Dunhill and Lucky Strike cigarettes, had said on Monday it was evaluating the sale of a "small part" of its roughly 29% stake in ITC, which makes Goldflake cigarettes.

ITC's shares fell 1.2% the next day. That brought its losses to 2.4% since Feb. 8, when BAT first said it would sell shares in the company. The jump on the day, however, has flipped the stock to gains of nearly 4% since that plan was announced.

However, it was not immediately clear if BAT sold any shares in the recent block deal. BAT and ITC did not immediately respond to Reuters' email for comment.

BAT would want to keep a stake of at least 25% in ITC, brokerage Jefferies said in a note on Monday, so that it can hold on to its board seats and influence over the company's strategic direction.

Cigarettes are ITC's largest business, accounting for more than 40% of its revenue. The company has been working to consolidate its business, with plans to spin off its hotel business.

($1 = 82.8525 Indian rupees)

(Reporting by Varun Vyas in Bengaluru; Editing by Savio D'Souza)