Post by : Shakul

Shares of Shree Renuka Sugars and Dalmia Bharat Sugar and Industries surged up to 7% on Monday, outperforming a weak broader market. The rally stood out as benchmark indices remained under pressure, highlighting strong investor interest in sugar stocks during a volatile trading session.

Other major players, including Dhampur Sugar Mills, Avadh Sugar & Energy, and Balrampur Chini Mills, also posted notable gains. This broad-based rise indicates renewed momentum in the sugar sector, which has recently become a focus area for investors seeking stability.

The primary driver behind this surge is the sharp rise in crude oil prices amid tensions in West Asia. Higher oil prices make ethanol—a cleaner fuel alternative derived from sugarcane—more valuable. Many sugar companies in India have diversified into ethanol production, benefiting directly as demand for ethanol blending with petrol increases.

On the global front, Brazil may divert more sugarcane toward ethanol production due to elevated oil prices. This could reduce global sugar supply, pushing prices higher and benefiting Indian exporters. Additionally, a weaker Indian rupee is making exports more competitive, further improving earnings prospects for domestic sugar firms.

The rally also reflects a structural shift in how the sector is perceived. Earlier dependent solely on sugar prices, companies are now seen as more stable due to diversified revenue streams from ethanol. However, analysts caution that the sustainability of this rally will depend on continued high oil prices and tightening global sugar supply.

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