7% return in one day: Why are sugar stocks rising today?

Sugar stocks gained strong momentum after positive developments for exports, ethanol demand and production outlook lifted investor sentiment, according to Zee Business research.

Sugar stocks' performance today

Sugar stocks extended their gains in Tuesday's trading session as major companies in the industry showed strong performance which attracted investors across the sector.

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Shares of EID-Parry (India) Ltd climbed around 3.36 per cent, rising from an opening price of Rs 787.45 to hit an intraday high of Rs 813.90. The stock remained one of the top performers among frontline sugar companies during the session.

Meanwhile, Shree Renuka Sugars Ltd saw a steady uptick, gaining approximately 3.05 per cent. The stock moved from its opening level of Rs 23.61 to touch a high of Rs 24.33, supported by continued buying interest.

Dalmia Bharat Sugar & Industries Ltd emerged as a strong gainer, jumping nearly 7.07 per cent during the day. The stock opened at Rs 293.50 and surged to an intraday high of Rs 314.25, making it one of the standout performers in the sugar pack.

Uttam Sugar Mills Ltd also traded higher, adding about 1.82 per cent. The stock moved from Rs 195.40 at open to Rs 198.95 at its peak, reflecting modest but steady gains.

Similarly, Dwarikesh Sugar Industries Ltd advanced around 4.19 per cent, rising from Rs 37.00 to an intraday high of Rs 38.55, indicating positive momentum among smaller sugar stocks as well.

Why did the sugar stocks rally today?

The rally followed after the government has increased the sugar export quota for FY26 by an additional 87,587 tonnes, providing a fresh trigger for the sector. Mills have been given a deadline until June 30 to complete exports. However, those that achieve at least 70 per cent of their allocated quota will be granted an extension until September.

However, mills that fail to export 70 per cent of their quota risk losing their allocation, which may then be reassigned to better-performing companies. This move is expected to benefit efficient players and improve overall export execution.

The rally is being propelled forward because of increased ethanol production efforts, according to Zee Business research. Sugar mills are likely to direct additional cane resources toward ethanol production as crude oil prices continue to increase. Demand from oil marketing companies is also expected to rise as ethanol blending targets gain momentum.

On the supply front, industry bodies like the Indian Sugar Mills Association, together with the All India Sugar Trade Association, have reduced their production forecasts. The decrease in sugarcane production from essential agricultural areas accounts for most of the reductions.

Production has been impacted in Uttar Pradesh, while yields have also weakened in Maharashtra and Karnataka, further tightening supply and supporting prices.