Sugar Industry in sweet spot

Sugar industry is the second largest agro based industry in India and is one of the most critical industry for the health of the rural economy, as the industry supports more than 500 million people directly or indirectly.

Sugar stocks have been quietly outperforming markets and that too by a huge margin for past few quarters. The decline in sugar stocks for the year 2016 by almost 11 percent; and non availability of sugar-cane coupled with steep sugar prices in international markets are all indicating good days for the sugar industry in near to medium term.

According to an analyst at Rudra Shares and Stock Brokers -" The International prices of sugar are also on the higher side from past couple of months. Therefore, higher demand & low inventory would fairly benefit this industry & increase the margins for the next year." 

Stock performance of Sugar Stocks:- 

The increasing demand for sugar and contraction in supply is leading to imbalance in supply demand equation for sugar. The consumption demand for sugar in India, China and several other global markets is on the rise.

With steady sugar prices being critical to the profitability of the industry, the outlook looks positive for the industry, at-least for short to medium term and investors should carefully look at investing in sugar stocks as the stock prices are at the mercy of sugar prices and the sugar industry is a highly cyclical industry.