Sugar stocks rallied anywhere between 4-9% on Tuesday on hopes that the government may extend subsidy on exports and give incentives for increasing ethanol production.

Sakthi Sugars closed at R19.95, climbing as much as 8.7% on the BSE, the highest among sugar company scrips. It was followed by Dwarikesh Sugar, which closed at R40.10, up 7.2%. Shree Renuka Sugar closed at R19.35 (up 7.2%), Bajaj Hindusthan at R23.9 (up 6.2%) and Rajshree Sugars at R28.40 (up 5.2%).

According to the sugar subsidy scheme announced by the government in February, a subsidy of R3,300 per quintal was given for raw sugar export of up to 4 million tonne for the 2013-14 and 2014-15 marketing years. While the scheme ended in September, speculation has been rife that  it might be extended for a few months.

All sugar stocks, except EID Parry, ended the session in green; EID Parry closed at R234.15, down 1.7% after giving away intra-day gains of 2.7%. Sakthi Sugars saw the highest intra-day gain at 14.2%, followed by Balrampur Chini (13.6%) and  Dwarikesh Sugar (13.5%).

Year-to-date, Dwarikesh Sugar has rallied the most with a gain of 70%. As many as five companies, including Bajaj Hindusthan, EID Parry, Balrampur Chini and Dhampur Sugar, have outperformed the benchmark Sensex in 2014, which has gained 33% this year.