The markets have cheered the sugar decontrol move. Stocks of frontline sugar companies as well as smaller ones surged on the bourses on Friday in an otherwise listless day for equities. Shares of leading sugar firms increased 2.8% to 12.8%. But most sugar scrips pared their initial gains at the close of trading. "The government has given the much-needed boost to the sugar industry. Sugar companies will benefit as prices will henceforth be market linked," market observers said.

There was hectic action in the counters of frontline sugar mills. Nearly 4 crore shares of Shree Renuka Sugars changed hands in the NSE during the day. The stock jumped 15% intra-day but ended with 2.8% gains. The Bajaj Hindusthan scrip, which soared 16.9%, closed flat at the end of trading. About 1.45 crore shares of the company changed hands. The Sakthi Sugars stock, which went up 16.2%, closed 6.3% higher.

"We believe the removal of levy quota and regulated release mechanism will be positive for the industry. Players will now get market price, which is higher by Rs10-12/kg vs levy price and will lead to better inventory management. Hence, removal of these regulations will lead to a competitive market environment and eliminate inefficiencies from the system," analysts at Edelweiss said in a note.