Sugar shares in focus

Balrampur Chini, Shree Renuka, Bajaj Hindustan, Dhampur Sugar and Oudh Sugar are up 3-7% on BSE.

Shares of sugar companies are trading higher by up to 7% in otherwise subdued market. Oudh Sugar Mills, Balrampur Chini Mills, Shree Renuka Sugars, Bajaj Hindustan and Dhampur Sugar Mills moved up between 3-7% on the BSE.  At 1015 hours, the benchmark S&P BSE Sensex is up 0.11% or 23 points at 20,658.

The PTI reports suggests that, the country’s sugar output fell over 13% to 14.4 million tonnes (mt) so far this year on delayed crushing. Mills had manufactured 16.6 mt of sugar in the corresponding period of the 2012-13 marketing year (October-September), according to industry body Indian Sugar Mills Association (ISMA).

Meanwhile, last week, the government announced a sugar subsidy of Rs 3,333 per tonne for exports of sugar up to 4 million tonne. The government had also announced interest free loans to mills to pay sugarcane farmers.

According to CRISIL Research, sugar prices are likely to rise over 10% by September this year on the back of the government's decision to give export subsidy on raw sugar with a view to bail out the industry.

"The government's decision to give a subsidy of Rs 3.33 per kg on exports of 4 mt of raw sugar over the next two years will reverse the trend of falling domestic sugar prices and provide some respite to the manufacturers,"  the research firm said in a statement.

Among the individual stocks, Oudh Sugar Mills is up 7% at Rs 16.25 on BSE. Balrampur Chini Mills and Bajaj Hindustan are up 4% each at Rs 42 and Rs 13.10 respectively, while Shree Renuka Sugars up 3% at Rs 21.10.