Sugar stocks rally: Dalmia Bharat, Dwarikesh, Avadh Sugar share prices zoom 20%; should you book profit?

Aside from the information of India advancing its goal of 20 % ethanol mixing in petrol by 5 years, frantic shopping for in mid and smallcap shares have led to a surge within the sugar shares. PTI file picture

Sugar shares reminiscent of Dalmia Bharat Sugar and Industries, Dwarikesh Sugar, Avadh Sugar & Power rallied as much as 20 per cent in Monday’s intraday offers on BSE. On World Atmosphere Day, Prime Minister Narendra Modi stated the federal government has resolved to fulfill the goal of 20 per cent ethanol mixing in petrol by 2025. At the moment, the ethanol mixing stage in petrol is round 8.5 per cent. “This could divert a large quantity of sugarcane to ethanol manufacturing and scale back sugar manufacturing. This could primarily bode nicely for the sugar trade because the state of affairs of a provide glut will mechanically get addressed and can help pricing self-discipline within the trade in the long term,” Binod Modi, Head – Technique, Reliance Securities, instructed Monetary Categorical On-line.

Okay.M.Sugar Mills shares worth surged 20 per cent, Dwarikesh Sugar Industries 16.12 per cent, Dhampur Sugar Mills 9.7 per cent, Avadh Sugar & Power 18.34 per cent, Dalmia Bharat Sugar and Industries 18.67 per cent. Triveni Engineering & Industries inventory soared 15.18 per cent and Balrampur Chini Mills 8.4 per cent in intraday session.

Underneath the Ethanol Blended Petrol (EBP) programme, the federal government has already reintroduced the administered worth mechanism for ethanol procurement, permitting ethanol manufacturing from a number of feedstocks like heavy molasses, sugarcane juice, sugar, sugar syrup, broken meals grains, maize and surplus rice shares with Meals Company of India (FCI).

Aside from the information of India advancing its goal of 20 per cent ethanol mixing in petrol by 5 years, frantic shopping for in mid and smallcap shares have led to a surge within the sugar shares. “Technically, Dalmia Bharat Sugar and Industries, Dwarikesh Sugar Industries and Avadh Sugar & Power are overbought and buyers are greatest suggested to guide earnings of their present purchase positions and anticipate a 25-30 per cent dip to purchase,” AR Ramachandran, Co-founder & Coach, Tips2Trades, instructed Monetary Categorical On-line.

A manufacturing scarcity by giant sugar-producing nations reminiscent of Brazil has led to some momentum in sugar shares. The rally acquired an extra push from the federal government’s choice to advance the deadline of attaining the 20 per cent ethanol mixing goal, stated an analyst. “From an trade perspective, this can be a constructive, particularly for the businesses with greater capacities and powerful steadiness sheets. That stated, the cyclicality within the trade isn’t going to go away. As such, one ought to have an excellent understanding of the trade cycle and particular insights to contemplate sugar shares from a long run perspective,” Richa Agarwal, Senior Analysis Analyst, Equitymaster, instructed Monetary Categorical On-line.

India’s sugar manufacturing rose by 13 per cent to 305.68 lakh tonnes within the first eight months of the present advertising yr ending September, primarily on account of greater output in Maharashtra, in accordance with the Indian Sugar Mills Affiliation (ISMA). Sugar advertising yr runs from October to September.

(The inventory suggestions on this story are by the respective analysis analysts and brokerage companies. Monetary Categorical On-line doesn’t bear any accountability for his or her funding recommendation. Capital markets investments are topic to guidelines and laws. Please seek the advice of your funding advisor earlier than investing.)