Sugar stocks rise sharply, get a boost from the launch of Global Biofuel Alliance by PM Modi at G20 Summit

Most of the sugar stocks today were trading in green following the Global Biofuel Alliance (GBA) launch by Prime Minister Narendra Modi on Saturday at G20 Summit. 

Except for Ugar Sugar Works Ltd, which was down nearly 3%, others sugar stock traded in green. Uttam Sugar Mills Ltd, Mawana Sugars Ltd, Bajaj Hindusthan Sugar, Avadh Sugar & Energy Ltd, and K M Sugars Mills Ltd gained 1% to 2%, while Dalmia Bharat Sugar & Industries Ltd, Sakthi Sugars Ltd, Balrampur Chini Mills Ltd, and Triveni Engineering & Industries Ltd rose over 2.5% to 6%.

Dalmia Bharat Sugar share price, Sakthi Sugars share price, Avadh Sugar share price, Triveni Engineering share price, and Mawana Sugars share price touched new 52-week high in today's session.

Analysts believe that the G20 biofuel initiatives would improve the prospects for India's sugar industry. 

According to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, since there is a global consensus on sustainability and renewable energy, the biofuel alliance proposed at the G20 summit is likely to be taken up in right earnest. Since India is the second largest producer of sugar, after Brazil, the Indian sugar industry stands to gain from the decision to increase ethanol blending with petroleum products.

"Sugar prices have gone up by around 3 percent during the last one month, the prospects for sugar companies have improved. But the good news is already in the price with many sugar stocks trading at 52-week highs," added Vijayakumar.

The prime minister launched the alliance in the presence of the US President Joe Biden, Brazilian President Luiz Inacio da Silva, Argentinian President Alberto Angel Fernández, Italian prime minister Giorgia Meloni, Bangladesh prime minister Sheikh Hasina among others.

Apart from India, Brazil and the US, the other G20 member countries supporting the initiative are Argentina, Canada, Italy, and South Africa. Bangladesh, Singapore, Mauritius, and the UAE are the G20 invitee countries.

The three founding members of alliance, the US, India and Brazil contribute about 85% of the global production and the 81% of consumption of ethanol.

Also Read: PM Modi launches Global Biofuels Alliance

The price of sugar stocks increased last week as well due to a number of factors, including news reports that the government of Uttar Pradesh planned to raise the State Advisory Price (SAP) for sugarcane, rising crude oil prices, and a weaker rupee.

Moreover by 2025, the government hopes to meet its 20% ethanol blend target. In such a scenario such stocks would benefit.

Also Read: Sugar Stocks: Uttam Sugar, Avadh Sugar, Bajaj Hindusthan Sugar, Triveni Engineering hit new 52-week high; here's why

On the technical front, analysts are witnessing strong buying in sugar stocks , and this moves are expected to continue in the near term.

“We are likely to see strong uptrend in the sugar cycle and one can have a positive bet in them. Today we are seeing strong buying in Shree Renuka Sugars, Sakthi Sugar, Dalmia Sugar, Balrampur Chini Mills, and this counter may remain outperformer, expect 20 - 30% upmove in the near term,” said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.