Shares of paper and jute manufacturing companies were in focus, ralling by up to 17 per cent on Tuesday, on the back of heavy volumes on expectation of government sops in the forthcoming Union Budget for 2020-21.
Among the individual stocks, Orient Paper & Industries, Emami Paper Mills, Star Paper Mills, Malu Paper Mills, Seshasayee Paper & Boards, International Paper APPM, JK Paper, and Ruchira Papers from the paper sector were up more than 5 per cent on the BSE. Meanwhile, Ludlow Jute & Specialities, Gloster and Cheviot Company from the jute & jute products industry were up 5 per cent. In comparison, the S&P BSE Sensex was up 0.73 per cent at 41,236 levels at 10:34 am.
According to media reports, the Finance Ministry may look at tech modernisation package for paper industry. The ministry could also urge the textile ministry to introduce schemes to aid jute packaging, business news channel CNBC Awaaz reported.
"Paper demand, driven by growing consumerism and e-commerce, ban on plastic usage in several states, rising literacy and continued government spending on education, is likely to outpace planned supply additions in the next couple of years," analyst at India Ratings and Research (Ind-Ra) said.
That apart, analysts at the rating agency believe that the raw material prices are likely to remain under check with increasing farm forestry and limited incremental demand, while decline in coal prices is likely to reduce energy costs. Besides, price hikes taken by domestic paper manufacturers over the past one-to-two years provide cushion to absorb the recent moderation in prices.
"After a strong upcycle in FY18-FY19, paper prices started to moderate in 2QFY20 on subdued global demand. Global pulp prices, which had risen sharply between 2HFY17-1HFY19, have fallen sharply, increasing the threat from imports on improved competitiveness of foreign producers. However, factors such as limited domestic supply addition, healthy backdrop of domestic demand, benign raw material prices and imposition of anti-dumping duties on some products continue to support industry outlook," it added.