Sugar Saga: Stocks take a nosedive

The proverb which says ‘Every dog has his day’ perfectly resembles the saga of the Sugar stocks in Aug 9 trade.  The stocks which were once in no mood to comprise suddenly have taken a backward stance on an intraday trade. Dwarikesh Sugar Industries as at 9.54 am, has slumped by 4.05 per cent; Dhampur Sugar and Renuka Sugar are down by 4.50 and 2.94 per cent respectively. The major reason why these stocks have taken a backseat, is  the sugar price which is down by 0.83 per cent to 8682 per quintal in futures trade.

On the other hand, on Aug 3, the Cabinet Committee on Economic Affairs, chaired by the Prime Minister, Narendra Modi has decided to extend production subsidy to sugar mills that achieve expected performance with respect to export of sugar and supply of ethanol. This was done to offset cost of cane and facilitate timely payment of cane price dues of farmers. On Aug 3, these stocks however were seen climbing up the hill with an extended rally on an intraday basis.

The Q1FY17 results of the major companies like Dhampur Sugar and Dwarikesh Sugar have posted strong results. Dwarikesh Sugar and Dhampur Sugar in Q1FY16 had faced losses. On Aug 9, the shares have largely seen profit booking, and have been brought down by the large chunk of investors vary of losing their money.