Dhampur Sugar, Balrampur Chini among other sugar stocks fall up to 5% after India bans sugar exports

Sugar stocks, including Balrampur Chini Mills, Shree Renuka Sugars, Triveni Engineering & Industries, Dalmia Bharat Sugar, Bajaj Hindusthan Sugar, Uttam Sugar Mills, Avadh Sugar & Energy, Dhampur Sugar Mills among others fell up to 5% on Thursday, 14 May, after the government tightened sugar export norms.

India, the second-largest producer of sugar globally, has prohibited sugar exports until the end of September, according to an official announcement, in an effort by the government to protect local supplies.

The decision comes after the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) revised its production estimates downward. The industry organisation now anticipates that India’s total sugar production will be 32 million tonnes for the season concluding on 30 September, which is lower than its previous estimate of 32.4 million tonnes.

The action signifies a change from the government's position in April, when it had dismissed the idea of restricting exports. The most recent notice, issued on Wednesday, bans international shipments with a few exceptions, including those already being loaded.

According to Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, the ban on exports of sugar is intended to curb the rise in prices of sugar in the context of rising inflation expectations triggered by the energy crisis. This is a temporary measure up to 30 September, and, therefore, the decline in the prices of sugar stocks is also likely to be temporary.

Vijayakumar also noted that this decision, coming close on the heels of the hike in customs duty on gold imports, indicates the government’s determination to anchor inflationary expectations. The ban on sugar exports is positive news for sugar-consuming industries like beverages and confectionery.

On the technical front, Ruchit Jain, Head - Equity Technical Research, Wealth Management, Motilal Oswal Financial Services, said that sugar stocks opened lower amid news of sugar export curbs. It is advisable for traders to keep a wait-and-watch approach and avoid aggressive trades in the sector for the near term.

Weather risks add to supply concerns

The forecast for the upcoming harvest, starting in October, is still unclear. A possible weak monsoon, influenced by the approaching El Niño, could adversely affect production. Furthermore, escalating global fertiliser prices—driven by geopolitical strains related to the conflict in Iran—are increasing financial pressures on farmers.

Global market dynamics

According to a Bloomberg report, global sugar markets were earlier experiencing an oversupply, which caused New York futures to drop to a five-year low at the beginning of this year; however, analysts have now reduced their surplus forecasts for the 2026–27 season. Prices have bounced back and are currently trading approximately 15% higher than those lows. Additionally, the ongoing conflict in Iran has increased the demand for biofuels, some of which are produced from sugar.

India’s Role in Global Trade

India has been instrumental in influencing global sugar markets lately. After a poor harvest in 2022–23, the nation implemented export limitations via yearly quotas. In the current season, exports were first permitted at 1.5 million tonnes in November, which was later raised by an additional 500,000 tonnes in February, prior to the recent complete restriction, as reported by Bloomberg.

Technical Outlook

According to Aakash Shah, Technical Analyst, Technical Research, at Choice Broking, following the government’s decision to prohibit sugar exports till September 2026, the sugar pack is likely to remain under near-term pressure, with sentiment turning cautious after recent gains.

Shah added that shares of major listed sugar companies, such as Dalmia Bharat Sugar and Dhampur Sugar, reportedly declined by up to 4% after the announcement, indicating an immediate negative reaction from the market.

" From a technical standpoint, Dalmia Bharat Sugar may witness immediate support near ₹340–330, while resistance is placed around ₹370–382. A break below support could trigger further corrective moves, whereas a sustained move above ₹382 may revive momentum.

Dhampur Sugar appears weak in the short term, with support seen near ₹135 and resistance around ₹155. Unless the stock reclaims higher levels, rallies may face selling pressure.

Shree Renuka Sugars remains volatile and may trade in a broader range of ₹23–26.6. Immediate support is placed near ₹23, while resistance is seen around ₹26.6. A breakout above this zone can improve sentiment.

Overall, the sugar sector has shifted into a sell-on-rise and consolidation phase after the policy shock. Traders should watch key support zones closely, as failure to hold those levels may extend the correction, while any rebound is likely to remain stock-specific until fresh policy clarity emerges," said Shah.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.