It’s just a Traders’ Cup of Tea

Tea, the gloomy sector has suddenly popped up in Thursday’s session outperforming the broader markets. Most of the tea stocks viz; Assam Company, Harrisons Malayam, Jayshree Tea and Industries and McLeod Russel saw an upward recovery in stock prices.

Tea stocks surged after tea prices rose nearly by Rs 7/kg as compared to the previous year, amid lower inventory levels. Going forward the inventory is likely to remain sluggish during July to October, which will help prices to peak and thereby the stocks.

The inventory remained low in the wake of lower production last year. Even if the peak season of tea production is at the door step, companies like McLeod Russel expect only 60 per cent of total production, which may trigger the prices towards the upside.

Moreover, though the rains have already hit the southern part of the country, the plantation growth is seen lull as excessive heat in previous months has damaged the crops. Tea is among the crops that are hurt massively. Nearly about 10 per cent tea is already destroyed in south. This would lead to a drop in volume and aggravate prices further.

The unfavorable weather has put Tea Association of India under huge pressure. The short term implications are positive but longterm is a big concern as it would increase other costs of production. 

Harrisons Malayalam rose 3.2 per cent to Rs 63.80, Assam Company India closed up by 8.7 per cent to Rs 5.74, Jay Shree Tea & Industries up 5.08 per cent to Rs 88.90, Asian Tea & Exports closed up 6.72 per cent at Rs 12.38, McLeod Russel India closed up 0.78 per cent to Rs 187.10 and Diana Tea was up 5.33 per cent to Rs 17.80.