Sugar stocks in focus: Short-term reversal or have they bottomed out?

After the massive slaughtering post April 2022, sugar stocks consolidated in June and are now witnessing a pullback rally.

Shares of sugar companies closed with strong gains on Thursday, July 21. Avadh Sugar & Energy was the top contender climbing 6.50 per cent followed by Dhampur Sugar Mills, which rose close to 5 per cent. Other sugar stocks like Balrampur Chini Mills, Shree Renuka Sugars and Triveni Engineering & Industries also registered considerable gains. 

Sugar stocks have risen sharply in the last two years, with few stocks even doubling in value.  However, post April 2022, most of them corrected sharply between 30 – 40 per cent. 

Lately, in the month of June, major sugar stocks held ground and traded sideways to calm the slaughtering seen post April 2022.

Meanwhile, according to sources, the government may allow sugar mills to export more than previously permitted to help them prevent defaults on contracts. It is considering allowing additional sales of as much as 1.2 MT of sugar for the year ending September 30. READ MORE 
 

Here’s the technical outlook to understand whether this pullback is a short-term reversal or sugar stocks have actually bottomed out:-

Avadh Sugar & Energy Limited (AVADHSUGAR)

Likely target: Rs 650

Upside potential: 10%

Shares of Avadh Sugar & Energy crossed the 200-day moving average (DMA) placed at Rs 556 with robust volumes. This move is accompanied by the Moving Average Convergence Divergence (MACD) moving above the zero line, thus pointing at a bullish bias. The next hurdle for the stock comes at Rs 650 and is 10 per cent away from the current price. The support exits at Rs 575 and Rs 550 levels. CLICK HERE FOR THE CHART

Dhampur Sugar Mills Limited (DHAMPURSUG)

Outlook: May inch towards Rs 280

Post the massive decline breaching 200-DMA, the stock is seen holding ground above the hurdle of Rs 230. Hereon, stability and consolidation abvoe this mark could enrich the underneath strength, shows the daily chart. The next hurdle for the stock exists at Rs 280 level. CLICK HERE FOR THE CHART

Triveni Engineering & Industries Limited (TRIVENI)

Likely target: Rs 280 and Rs 300

Upside potential: 8% to 15%

The stock firmly holds the support of 50-weekly moving average (WMA), as it lingers around the same, shows the weekly chart. Thus, 50-WMA set at Rs 244 becomes the crucial support and as long as the stock manages to hold this mark, a sharp pullback cannot be ruled out. The immediate resistance for the stock is seen at Rs 280 and Rs 300 levels. CLICK HERE FOR THE CHART

Shree Renuka Sugars Limited (RENUKA)

Likely target: Rs 55

Upside potential: 11%

The stock may seek to scale higher highs backed by a positive divergence of Relative Strength Index (RSI) at Rs 55.50-odd level, which is the next major obstacle. The MACD has crossed the zero line indicating a positive momentum supporting a bullish sentiment. The immediate support comes at Rs 47 and unless Rs 45 is not breached, the positive bias may not see aggravated selling pressure. CLICK HERE FOR THE CHART

Balrampur Chini Mills (BALRAMCHIN)

Outlook: Requires to cross 200-DMA

Shares of Balrampur Chini are inching closer to 200-DMA placed at Rs 395 level. Once this hurdle is conquered, the outlook may deliver a bullish breakout. Until then, the level of Rs 331 remains a key neckline to watch, as it is the “Death Cross” mark. Breakout above 200-DMA could see Rs 420 level.  CLICK HERE FOR THE CHART