Sugar Stocks: Uttam Sugar Mills, Ugar Sugar Works, Magadh Sugar & Energy hit new 52-week high; check details

Sugar Stocks News: Overall sugar stocks were in buzz and showing strong momentum backed with volumes on Thursday's trading session. Analysts predict this trend to continue and advise using dips to purchase as this sector may outperform in the next few sessions.

Uttam Sugar Mills (up over 14%), Ugar Sugar Works (up 7.1%), Mawana Sugars (up 6.27%), K M Sugars Mills (up 4%), Dalmia Bharat Sugar & Industries (up 5.64%), Sakthi Sugars (up 4.46%), Avadh Sugar & Energy (up 7.38%), Balrampur Chini Mills (up 2.23%), Bajaj Hindusthan Sugar (3.69%), Triveni Engineering & Industries (1.8%) were all trading in the green zone.

Uttam Sugar Mills , Ugar Sugar Works , Magadh Sugar & Energy recorded new 52-week high and Balrampur Chini Mills was trading near its 52-week high level.

“Due to the firming of sugar prices globally and the US Sugar Futures market, which is trading at decade-high levels, the majority of sugar companies, including Uttam Sugar, Vushwaraj Sugar, Avadh Sugar, and The Ugar Sugar Works, have enjoyed a remarkable run recently,” said Aamar Deo Singh, Senior Vice President at Angel One. 

Analysts from the sugar pack mentioned above are bullish on Balrampur Chini Mills and recommend buying the stock. According to Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One, they are seeing a prices and volumes breakout expecting it to move towards 440 levels , 400 is immediate support.

Furthermore, the government has extended the interest subvention scheme for sugar firms until September 30, according to CNBC-TV18. The move was made in order to meet the ethanol blending requirement. This news added to the stocks optimistic sentiment.

Initially, the centre extends the ethanol subsidy programme through March 2023; the move to extend the time line for ethanol projects was to aid in increasing ethanol production capacities again.

“On a day of extreme volatility when Small & Midcap stocks faced selling pressure, sugar stocks bucked the trend and registered smart gains on the back of extension granted for the interest subvention scheme in a move primarily aimed at achieving the ethanol blending target,” said S Ranganathan, Head of Research at LKP Securities.

Another factor influencing stock sentiment was market forecasts that sugar prices would remain high owing to a poor weather forecast and demand would rise.

According to Singh, the price increase is primarily being driven by rising domestic demand, a lowering closing stock anticipated to be 6 million tonnes at the end of the Indian sugar season in 2022–2023 with less than three months of consumption, and a worsening weather outlook due to the threat of EL Nino on Asian output.

"Sugar stocks are inline moving on the northern highway on the back of sugar prices soaring highs in recent weeks, reaching multi-week highs due to tightening supplies worldwide. Market is assuming that unpredictable weather patterns due to El Nino effects to various regions of the sugar producer countries would affect sugar production and keep sugar prices high. 

Despite India, the world's second-largest sugar producer, domestic prices have remained stable due to government support and imposing caps on prices. While short to medium term we would see a cascading effect on next season and impact exports. We remain neutral in this sector," Prashanth Tapse, Senior Vice President of Research at Mehta Equities.

Furthermore, an analyst stated that market reports indicate that ethanol prices would be hiked shortly, which will benefit ethanol producers with high capacities and integrated facilities.