Shares of eight sugar companies hit 52-week high on the BSE during intraday trading on Tuesday. Balrampur Chini Mills, DCM Shriram Industries, Dhampur Sugar Mills, Dwarikesh Sugar, EID Parry, Indian Sucrose, KM Sugar Mills and Triveni Engineering & Industries hit their respective 52-week high on the BSE during intra-day trade on Tuesday.
Shares of sugar companies shot up on the back of heavy volumes. Additionally as Uttar Pradesh will go to polls next month, it reduces the likelihood of any reduction in import duties. Reports pertaining to debt restructuring package for the sector have also boosted sugar stocks.
Medium sugar (M-30) closed at Rs 3,890 per quintal, while small sugar (S-30) ended at Rs 3,781 per quintal. In past two-weeks, the price of M-30 sugar rose by 2.7%, while of S-30 by 2.8% till Monday.
The Indian Credit rating Agency (Icra) expects domestic sugar production to decline to 23.0 million tonne (MT) during 2017 (SY2017), a decline of around 9% over the previous year. This is largely on account of lower cane availability in Maharashtra and Karnataka due to poor monsoons last year.
You may also like to watch this:
During SY2016, the decline in sugar production, along with exports, has resulted in a closing stock of around 7.6 MT, marking a significant decline of 20% y-o-y. However, the stocks of around 1.2 MT are still higher than the normative sugar stock. The situation of domestic production falling short of consumption is likely to continue in SY2017. Domestic sugar production is expected to be lower than the consumption by around 2.6-2.8 MT.