Almost 30 sugar companies' shares rose in Thursday's trade, capturing the attention of investors. Avadh Sugar soared 13.20 per cent, Magadh Sugar jumped 12.8 per cent, and DCM Shriram rose 10 per cent. 

 

   

Analysts remained bullish on the outlook of sugar stocks on a technical basis. DCM Shriram Industries was up 1.84 per cent, trading at ₹160.3 and Kothari Sugars & Chemicals was up 1.23 per cent on the NSE at 1:55 pm on November 24. 

 

“Protests in Karnataka and unpredictable rainfall nationwide have severely affected sugar production, resulting in reduced yields and a significant increase in sugar prices. Domestic sugar prices are also rising in parallel to global prices due to supply-side constraints," said, T Manish, Research Analyst, SAMCO Securities.

 

“EID Parry (India), Balrampur Chini Mills, and Dalmia Bharat Sugar Industries are well-positioned to benefit from these challenges. Further, all these stocks are trading above 50 and 200EMA and RSI>50 making these stocks technically strong with an upside potential of 10% from current level," Manish further added.

 

"The sugar industry is going to have a robust financial year as sugarcane crop is low due to below-normal monsoons while sugar demand is high," said Kush Ghodasara, an independent market expert (CMT).

 

The El Nino weather pattern made August the driest in more than a century. Rainfall during the month was 161.7 mm, the lowest since 1901, LiveMint earlier reported.

 

"India may shift sugar exports to the ‘prohibited’ category from ‘restricted’ for the entire 2023-24 (October-September) season, concerned about the impact of the weakest monsoon in five years on sugarcane crops in the major producing states of Maharashtra and Karnataka, two government officials told LiveMint.

 

"Ethanol, which is a byproduct of the sugar industry, will not achieve the desired target because sugar prices are on the rise, and therefore, mill owners are concentrating more on sugar output," said Ghodasara. "On the other hand, ethanol prices offered by OMCs are lower, which makes it viable for mill owners to produce it at current sugar prices."

 

Additionally, "the sugar industry, fueled by government support, diversification towards ethanol, and experts' bullish outlook, is poised for significant growth. As the market continues to react to these developments, investors are keeping a keen eye on stocks like Kothari Sugars, Piccadilly Agro, and Renuka Sugars, anticipating continued momentum in the small and mid-cap segment of the sugar industry," said Prashant Tiwari, an NSE certified sub-broker with Motilal Oswal.

 

One of the top picks in the sector, according to Ghodasara, is Balrampur Chini, which is seeing an upside trend, with a target of ₹525 and a stop loss at ₹431. "Stock is steadily travelling in an upside trending channel on the weekly time frame and also taking support of 10 weeks average since last 8 weeks," he added.

 

Additionally, EID Parry is "signalling a trend reversal to be positive and also prices have just crossed over the 10 week average at 500. The stock has taken multiple-week support at ₹457, which can be the stop loss while the target can be over ₹700," according to Ghodasara Re"