The positive news about expectations of an increase in sale and hike in the minimum selling price (MSP) resulted in sugar stocks rally on BSE on Friday. Shares of sugar companies rallied upto 20 per cent.
Among the stock that surged in the intraday include Dalmia Bharat Sugar and Industries, Dhampur Sugar Mills and Balrampur Chini Mills. They rose from 15 per cent to 20 per cent. While Avadh Sugar & Energy and Dwarikesh Sugar Industries were locked in the upper circuit of 10 per cent on the BSE.
As per ISMA, with the rules under lockdown getting relaxed, demand for sugar has started picking up from beginning of May, 2020. Now that the country is entering the unlocking phase, restaurants and malls also being allowed to open, demand of sugar will further go up in June, as compared to May 2020. Along with the summer demand, it can be expected that sugar mills may be able to sell the entire June quota, along with the carry forward from May.
According to the media reports, the government is may hike sugar MSP by Rs 2 per kg which will help millers to clear pending cane arrears.
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