Sugar stocks decline after government halts diversion for ethanol production
Sugar stocks fell sharply after the government imposed a zero sugar diversion norm for ethanol production in 2026-27, impacting companies like Shree Renuka and Magadh Sugar amid broader market declines.
Stocks of sugar producing companies fell during Monday’s trading session after the government directed oil marketing companies to cut down on sugar diversion to produce ethanol to zero for the 2026-27 supply year. Due to the new directive aimed to increase sugar availability and reduce the pressure on sugar prices, oil marketing companies barred ethanol made from sugarcane juice, sugar syrup and B-heavy molasses for blending in petrol.
The sugar stocks declined up to 6% as a result of the new rule. Shree Renuka Sugars and Magadh Sugar and Energy saw the highest decline during the trading session, falling by 6.4% and 6.21%, respectively while Bajaj Hindusthan Sugar and Dwarikesh Sugar Industries fell over 5%. Andhra Sugars, Dhampur Sugar Mills and Dalmia Bharat Sugar and Industries also saw considerable price correction during the day.
As reported by PTI, the tender, issued on October 16 by Bharat Petroleum Corporation Ltd (BPCL) on behalf of oil marketing companies (OMCs), seeked bids for around 11 billion litres of ethanol for the supply year beginning November to meet the requirement of doping 20 per cent ethanol in petrol. It also cut the incentive for maize-based ethanol, lowering the procurement price to Rs 68.86 per litre from Rs 71.86.
Besides the sugar stocks, the benchmark equity indices also came under renewed selling pressure during Monday’s session, reversing their recent recovery amid weak global cues. Brent crude prices hovered near $110 per barrel, while selling in private banks and IT stocks weighed on investor sentiment. The indices snapped a two-day winning streak, with the BSE Sensex declining by 876.37 points, or 1.17%, to close at 73,852.90, while Nifty fell 257.20 points, or 1.11%, to end the session at 22,888.95.
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