Following the Global Biofuel Alliance (GBA) introduction on Saturday at the G20 Summit, the majority of sugar stocks were trading in green today. Except for Ugar Sugar Works Ltd, which was down roughly 3%, all sugar stocks were in the black. While Dalmia Bharat Sugar & Industries Ltd, Sakthi Sugars Ltd, Balrampur Chini Mills Ltd, and Triveni Engineering & Industries Ltd increased more than 2.5% to 6%, Uttam Sugar Mills Ltd, Mawana Sugars Ltd, Bajaj Hindusthan Sugar, Avadh Sugar & Energy Ltd, and K M Sugars Mills Ltd gained 1% to 2%.
Today’s session saw new 52-week highs for the stock prices of Dalmia Bharat Sugar, Sakthi Sugars, Avadh Sugar, Triveni Engineering, and Mawana Sugars.
Analysts predict that the G20’s biofuel measures would boost India’s sugar industry’s prospects.
The biofuel alliance suggested at the G20 summit is likely to be taken up in full force, according to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. This is because there is a worldwide agreement on sustainability and renewable energy. The move to boost ethanol blending with petroleum products would benefit the Indian sugar sector since India is the world’s second-largest producer of sugar after Brazil.
“Sugar prices have gone up by around 3 percent during the last one month, and the prospects for sugar companies have improved. But the good news is already in the price with many sugar stocks trading at 52-week highs,” added Vijayakumar.
President Joe Biden of the United States, President Luiz Inacio da Silva of Brazil, President Alberto Angel Fernández of Argentina, Prime Minister Giorgia Meloni of Italy, and Prime Minister Sheikh Hasina of Bangladesh were among those present as the Prime Minister announced the alliance.
Argentina, Canada, Italy, South Africa, and Brazil are the other G20 members that are backing the proposal in addition to India, Brazil, and the US. The G20 invited nations include Bangladesh, Singapore, Mauritius, and the United Arab Emirates.
About 85% of the world’s production and 81% of its consumption of ethanol are contributed by the three founding members of the alliance, the US, India, and Brazil.
Several reasons, including news reports that the government of Uttar Pradesh intended to hike the State Advisory Price (SAP) for sugarcane, increasing crude oil prices, and a weaker rupee, contributed to the price of sugar stocks rising last week as well.
Additionally, the government aspires to reach its 20% ethanol mix goal by 2025. Such stocks would profit in this situation.
Analysts are seeing significant purchasing in sugar stocks on the technical front, and these movements are anticipated to persist for the foreseeable future.
“We are likely to see a strong uptrend in the sugar cycle and one can have a positive bet in them. Today we are seeing strong buying in Shree Renuka Sugars, Sakthi Sugar, Dalmia Sugar, Balrampur Chini Mills, and this counter may remain outperformer, expect 20 – 30% up move in the near term,” said Rajesh Bhosale – Equity Technical and Derivative Analyst, Angel One.
