Sugar stocks extend overnight gains on government sops

MUMBAI: Shares of sugar companies extended overnight gains as sentiment turned positive following the government’s decision to hike import duty on sugar. To tackle the rising crude oil prices, the Food Minister announced that ethanol blending with petrol will be increased to 10 per cent from 5 per cent.

The government has also decided to provide additional interest-free loan of up to Rs 4,400 crore to cash-starved sugar industry for paying cane arrears. It has extended sugar export incentives of Rs 3,300 a tonne till September 2014

“The government sweetened sugar industry with four major favourable decisions which may bring sugar mills on fast track and prevent them from their sickness,” said HDFC Securities report.

Also, the sugar prices in the international markets are likely to move higher as sugarcane crop may be affected due to El Nino.

Monsoon in India, which is the second largest producer after Brazil, is delayed and there are concerns of below-normal rainfall this season.

Dry weather pattern in Brazil is also likely to hurt sugar output.

“Global output will fall short of demand in the year ending Sept. 30, with the gap widening next season,” Bloomberg quoted Bruno Lima, a senior risk-management consultant at FCStone do Brasil.

Bajaj Hindusthan surged 10 per cent, Shree Renuka Sugars soared 5.78 per cent, Uttam Sugars gained 4.83 per cent, Dwarikesh Sugar moved up 5 per cent, Oudh Sugar rallied 4.87 per cent and Dhampur Sugar moved 3.42 per cent intraday.