NEW DELHI: Continuing their winning streak for another day, sugar stocks surged up to 7 per cent in Wednesday’s trade as crushing season for cane in Uttar Pradesh and Maharasthra — the two biggest sugar-producing states in the country — is set to begin on time this year.
Sugar stocks have soared anywhere between 20 per cent and 80 per cent so far this month, as global shortages have helped commodity prices to rebound from a seven-year low, thanks to a strengthening El Nino weather pattern, which is expected to pose a threat to sugar output in Australia.
There are hopes that a surge in global sugar prices on account of global supply shortages is going to boost margins for domestic sugar companies. The widely-tracked sugar futures contracts in New York have shot up around 16 per cent since August, the biggest rise in two years amid weak supplies. On Wednesday, most sugar stocks rallied up to 7.2 per cent on BSE, led by industry majors Bajaj Hindusthan and Shree Renuka Sugars.
Bajaj Hindusthan Sugar climbed 9 per cent to hit a high of Rs 20.79. Shree Renuka Sugars climbed 6.72 per cent to Rs 12.25. Balrampur Chini advanced 2 per cent and was ruling at Rs 64.90. Sakthi Sugars jumped 3.13 in trade to Rs 26.50. Dwarikesh Sugars rose 5 per cent, Dalmia Bharat added 4 per cent.
“The rally in sugar stocks may continue as it reflects the change in fundamentals,” Devang Kamdar, vice-president at Sharekhan, told ET.
“International sugar prices may rise further and the shortage of the commodity is the key driver for sugar stocks. Improvement in sugar prices will ensure that eight out of 10 sugar companies will turn Ebdita positive and be able to service their debt,” the expert said. Also, sugar imports in China are up 50.7 per cent year-to-date through August compared with the same period last year, according to Chinese customs data.
