Sugar stocks soar on the backdrop of increased sugar price

While the market is struggling to continue the rally on Thursday, sugar stocks is seeing a decent run-up on the backdrop of high sugar price in the global market.

Sugar price in global market is at three months high. Reacting to this, sugar stocks like Triven Engineering, Balrampur Chini, Dwarikesh sugar, Uttam sugar have gained more than 5 per cent on Thursday. These stocks have also gained 30-60 per cent in last three months due to high sugar price in global market along with domestic decreasing sugar supply .

Reportedly, sugar production in India is expected to stay low for the second consecutive year due to the decreased cane production in the country. The decrease in production is also due to the impact of draught in western and southern states of the country, that are considered to be the major contributing states for sugar. 

Recently, Indian Sugar Mills Association (ISMA) has also reported about the drop in sugar production and sales during the first nine months of FY16-17. This drop in production volume would also lead to increase in price as the demand growth is expected to stay the same which in turn will directly impact top line of sugar companies in India.