MUMBAI: Shares of sugar manufacturers rallied up to 20% on Wednesday on reports that a meeting of a group of Union ministers later in the day may discuss a relief package for the crisis-ridden industry, which may include interest-free bank loans. 

Sugar mills in Maharashtra and Uttar Pradesh, the top two sugar producing states, have not begun cane crushing in the new crop year that began in October citing mounting cane arrears, huge unsold stocks and inability to pay higher prices to farmers. Among the mills based in Uttar Pradesh, Oudh Sugar MillsBSE 7.63 % closed with a gain of 15.41% on BSE, while Bajaj Hindusthan rose 13.85%. Most sugar mills in Maharashtra are not listed as they are run as cooperatives. 
 

Analysts, however, said investors need to exercise caution with sugar stocks. "Sugar stocks would continue to react to ongoing news surrounding the shut down by UP-based mills due to high sugarcane prices, but we would advocate a cautious stance and recommend avoiding sugar stocks at this juncture," said Amar Ambani, head of research at IIFL. Reports said finance minister P Chidambaram, agriculture minister Sharad Pawar and civil aviation minister Ajit Singh will meet on Wednesday evening to discuss the sugar crisis.