While the Sensex and Nifty continued to tumble on Friday, the day has one clear winner- the sugar stocks which gained as much as 9% intra-day after the food ministry said that India is considering scrapping sugar export tax. “India’s 2017-18 output is seen at 24.9 million tonnes,” Reuters reported the food minister as saying.
Shares of Dhampur Sugar Mills, Shree Renuka Sugars, Balrampur Chini, Mawana Sugars, Dwarikesh Sugar saw considerable surge, with Dhampur Sugar and Mawana Sugar rising by more than 7% each. Dhampur Sugar’ which opened at Rs 190, hit an intra-day high of Rs 211, while Mawana Sugar which opened at Rs 59.6 surged to Rs 66.25.
India has imposed a limit on the amount of sugar that mills can sell in the market during February and March, according to a government order late on Thursday, in a bid to prop up prices of the sweetener, a Reuters report said. India also increased the import duty on sugar to 100 percent from 50 percent on Tuesday. Earlier, apprehending import of cheaper sugar from Pakistan, the food ministry had pushed for 100% import duty on the sweetener.
According to the latest rules, at the end of February, mills need to be holding as inventory at least 83% of the opening stock from January and February’s production. The limit is 86% for the end March, the government order said.
India which is the world’s second-biggest sugar producer, saw sugar prices plunging by 17 per cent in the domestic market since the start of marketing year on October 1, making it difficult for mills to pay farmers the 11 per cent hike in cane prices.
In the previous year, Maharashtra’s crushing season started on a stormy note with cane growers taking to the street demanding higher cane prices for their produce. The Centre had fixed FRP at Rs 2,300-2,500 per tonne depending on the recovery.