Mumbai: Most sugar stocks fell on 9 April, losing between 3% and 5.5% even as the benchmark index, the Sensex, rose 2.5%, or 321.66 points, to close at 13,177.74, its biggest rise in a single trading session since 22 March.
Among the sugar stocks, Upper Ganges and Monnet Sugar lost more than 5% each while four others—Thiru Arooran Sugars, KM Sugar Mills, Venus Sugars and Uttam Sugar Mills—fell more than 4% each. A few other sugar stocks, such as Dharani Sugars & Chemicals, Rajshree Sugars & Chemicals, Dwarikesh Sugar Industries and Indian Sucrose, fell more than 3% each.
Major players such as Bajaj Hindusthan, Balrampur Chini and Dhampur Sugar were gainers of the day.
However, their gains were limited.
Bajaj Hindustan’s stock rose 1.89% to close at Rs207.65; Balrampur Chini gained 1.49% to Rs74.80 and Dhampur Sugar was up 0.61% to Rs13.08.
Analysts tracking the sector attributed the decline in the sugar stocks to the free fall in sugar and molasses prices on account of a surge in domestic and global production.
Reduction in customs duty on denatured ethyl alcohol from 10% to 7.5% also added to the weakness, they said.
“The outlook for the sugar sector was negative due to the depression in the sugar prices,” said a Mumbai-based analyst who tracks this sector.
The premier sugar body in the country, Indian Sugar Mills Association (Isma), in its proposals sent to the finance ministry before the 28 February Budget, wanted a reduction in excise duty on molasses of up to Rs170 per tonne from the current Rs750 per tonne.
It had also pitched for exemption of service tax on goods transported to the sugar industry and promotion of ethanol as a biofuel by giving a tax holiday on production of ethanol and reintroduction of a reduction in special additional excise duty on ethanol-blended petrol of Re0.30 per litre.
None of the proposals were included in the latest Budget.
Also, contrary to the reduction sought, there has been an effective hike in excise duty on sugar and molasses on account of the increase in education cess from 2% to 3%.