Why Are Sugar Stocks Rising Today? Bajaj Hindusthan Jumps 12% As Supply Worries Persist

Sugar stocks rebounded on Monday after a brief pause on Friday, even as the government's move to allow duty-free imports of raw sugar did little to cool sentiment. Bajaj Hindusthan Sugars led the gains, soaring 12.4% on the NSE to touch a high of Rs 26 before paring some gains to trade 11% higher at Rs 25.72.

Shree Renuka Sugars, Dalmia Bharat Sugar & Industries and Triveni Engineering & Industries also jumped, rising as much as 7.8%, 4.4% and 3.5%, respectively, during the session. Shree Renuka later trimmed its gains to trade 7% higher at Rs 26.88, while Triveni and Dalmia Bharat were up 2% and 2.55%, respectively, as of 10:20 am.

Balrampur Chini Mills and EID Parry (India) climbed more than 3% each to Rs 751 and Rs 821, respectively, against a 0.12% advance in the benchmark Nifty.

The rally in sugar stocks has been building for some time. Sugar prices have climbed from around Rs 41-42 per kg in the previous quarter to above Rs 50 per kg, supported by tight inventories and supply concerns. In Monday's session, Dhampur Sugar Mills gained 8% to Rs 200, Uttam Sugar rose 11% to Rs 359 and Triveni Engineering added 4% to touch Rs 306.

India has approved duty-free imports of 1 million metric tonnes of raw sugar to ease domestic prices and improve supplies ahead of the festive season. However, the impact is unlikely to be immediate. Much of the raw sugar is expected to be delivered only by October, leaving the market tight in the near term amid a delayed monsoon and weather disruptions.

Some shipments may reach Indian shores before October 15, although the exact volume remains difficult to estimate, according to Prakash Naiknavare, president of the National Federation of Cooperative Sugar Factories (NFCSF). He said Brazil remains the main potential source of imports for now, while Thailand, another traditional supplier, is dealing with its own production shortfall.

Sugar shipments from Brazil typically take 40-45 days to reach Indian ports, with additional time required to transport the cargo from ports to mills, Naiknavare said.

Why Are Sugar Stocks Rising?

Festive demand is one of the factors supporting sugar prices. Consumption typically rises between August and November as Ganesh Chaturthi, Dussehra and Diwali drive demand for sweets, biscuits and other confectionery products.

Sugar prices have risen around 10% over the past month to record levels, while patchy rainfall and dry conditions have raised concerns over sugarcane output.

Supply concerns in Brazil have added to the pressure. The world's largest sugar producer has flagged a delay in its harvest due to adverse weather and suspended its bi-weekly harvest and production reports, leaving the market with less visibility on output.

Global deficit estimates also point to a tighter market. Green Pool has projected a shortfall of 3.3 million tonnes, while StoneX has estimated a deficit of 1.7 million tonnes. The International Sugar Organisation has forecast a deficit of 0.26 million tonnes.

The government has also tightened stockholding rules for bulk sugar consumers, reducing the limit to 15 days from 30 days. It has directed sugar mills to report sales, buyers and price levels for August 17-19 after ex-mill prices rose by around Rs 10 per kg, or 20%, over four to five days.

The measures come as the government steps up scrutiny over hoarding and monitors supplies ahead of the festive season, while assessing whether additional imports may be required to bridge the shortfall.

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