Renuka Sugar to Balrampur Chini: Why sugar stocks in India are nosediving today?

livemint.com:

Stock market today: On account of market buzz about the rise in the input cost of sugar companies in the future, most of the sugar stocks in India witnessed high selling pressure during morning deals. Sugar major Balramput Chini share price today opened downside at ₹375 apiece on NSE and went on to touch an intraday low of ₹372 within a few minutes of the opening bell, logging nearly 2.50 percent dip on Thursday session.

Shree Renuka Sugars share price opened at ₹50 apiece and went on to touch an intraday low of ₹47.85 per share level, recording around a 3 percent dip against its Wednesday close of ₹49.60 per share. Shares of Dwarikesh Sugar, Rana Sugars, Dalmia Bharat, Triveni Engineering and Industries, KCP Sugar and Industries Corporation, Mawana Sugars, etc.

also came under the sell-off heat during Thursday morning deals and slipped into the red territory by over 1 percent intraday loss. Highlighting the reason for the dip in sugar stocks in India, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Sugarcane shares are under pressure today as the market is expecting a rise in input cost of the sugar maker companies after the rise in FRP of sugarcane." Gorakshkar said that the Cabinet Committee on Economic Affairs in its meeting on Wednesday has raised Fair and Remunerative Price (FRP) of sugarcane for Sugar Season 2024-25.

This is expected to put sugar maker companies under pressure as they will have to borrow sugarcane at a higher price in the above-mentioned sugar season. The Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi approved the FRP of sugarcane for Sugar Season 2024-25 at ₹340/quintal at sugar recovery rate of 10.25%.