Commodity Online
MUMBAI: The restriction on futures trading in Sugar has proved to be sweet for sugar stocks on the Bombay Stock Exchange (BSE) as most stocks recorded robust rise in the stock prices since the imposition of ban on 26th May, 2009.
Leading sugar makers including Sakthi Sugars, Dhampur Sugar Mills, Balrampur Chini Mills Ltd and Uttam Sugar Mills Ltd recorded heavy appreciation in the stock prices since the imposition of ban on sugar futures.
Dhampur Sugar recorded the most 19% rise in the stock price from Rs.56.90 to Rs.70 today. Similarly, Sakthi Sugars Ltd and Balrampur Chini Mills recorded 12% rise each. Uttam Sugar Mills surged from Rs.44.45 on 26th May, 2009 to Rs. 49.80 recently. Dwarikesh Sugar Industry and Shree Renuka Sugars Ltd recorded a moderate gain during the period. Dwarikesh Sugar surged by 4%, while Shree Renuka Sugars soared by 3.19% since the ban.
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However, sugar stocks traded on a lower edge on the BSE today due to weakness on the bourses owing to heavy selling pressure from the foreign funds.
Experts opined that the ban on sugar futures was a regressive step by the government as it did not addressed the real problem of demand- supply mismatch in the sugar sector. According to them, the ban would hamper the process of transparent price discovery in sugar.
The ban on sugar Futures trading was imposed on May 26, however, the Abhijit Sen committee had found no conclusive evidence to suggest that futures trading in sugar had lead to price rise. Traders found that it was purely a demand – supply deficit that had lead to the swelling of prices in sugar.
The fall in the sugarcane output had had taken a toll on sugar production leading to an estimated decline to 15 million tonnes in 2008-09 (April-March) from 25.6 million tonnes in FY2008. Additionally, the sugar consumption was on the rise over the period, which resulted in an estimated shortfall of close to 10 million tonnes this year.
