April 21, 2024

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Sugar stocks trade weak in a organization marketplace on reduction in export subsidy

3 min read
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Shares of sugar makers were being buying and selling weak (down by up to 8 per cent) on the BSE in intra-day trade on Friday in an if not sturdy market after the govt slashed subsidy on sugar exports from Rs 6,000 for each tonne to Rs 4,000 for each tonne with instant influence in check out of business global selling prices.

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Dalmia Bharat Sugar and Industries, Bajaj Hindustan Sugar, Dhampur Sugar Mills, Dwarikesh Sugar Industries, Balarampur Chini Mills, Uttam Sugar Mills and Avadh Sugar Mills were down 3 per cent to 5 per cent on the BSE. Praj Industries, engaged in the business enterprise of procedure and undertaking engineering, dipped 8 for every cent to Rs 350 in intra-working day trade these days. In comparison, the S&P BSE Sensex was up 1.4 for each cent at 50,263 details at 11:55 am.&#13
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Most of these shares had outperformed the market by a massive margin, just after reporting a solid set of numbers for the quarter finished March 2021 amid rising sugar rates in world market.

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On Thursday, the govt decreased the export subsidy from Rs 5.85 / kg to Rs 4. / kg on any sugar contracted for export on or immediately after Could 20, 2021. It is crucial to note that 5.7 million tonnes (MT) out of 6. MT has previously been contracted for the 2020-21 season.

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“Current world wide white sugar costs are trading at Rs 33/ kg (Indian equivalent price). These costs are remunerative with out any sugar subsidy by the govt. We believe the government’s decision is an indicator that it could minimize or do away with sugar subsidy for the 2021-22 sugar time. This would keep international charges agency and make sure that sugar millers continue on to export additional quantities less than OGL (without the need of subsidy) at remunerative prices,” ICICI Securities mentioned in a notice.

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Some of the current market indicators indicates that all over 50,000 tonnes of exports that have now been contracted from Maharashtra beneath OGL & any price tag higher than US$470/tonne would also appeal to exports from UP beneath OGL. We consider added 1-2 MT of exports can be easily contracted less than OGL in 2020-21 time by itself. This would further more rationalize inventories and retain domestic price ranges, the brokerage company claimed.

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“We reiterate our beneficial stance on India’s sugar field as it is perfectly poised to profit from global and domestic things. Decreased output from nations around the world like Brazil, Thailand and the EU would hold supplies tight and worldwide selling prices business, enabling India to increase exports. On the domestic front, favorable insurance policies, climbing ethanol demand from customers (mixing focus on of 20 per cent by CY25 from 8 for every cent now), intense ethanol potential addition would generate an earnings of the sugar corporations,” analysts at Elara Capital in recent report.

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