India's production of sugar has increased phenomenally in the October-February period by 42%. This is due to better monsoons which resulted in higher acreage for sugarcane production. The global glut is causing the price of the commodity to fall which is expected to decline further.
The decline in stocks of sugar producing company continues in trade on Wednesday as the increased supply see limited offtake.
Currently, the price of sugar has fallen to a four-year low of Rs 3,500 a tonne. This has come after some of the measures of the government to support the industry such as the increase in import duty as well as limited inventory levels for sugar mills for February-March period.
The sugar production output is estimated upwards of 13% at 29.5 million tones and hence the companies need to export. Meanwhile some of the companies have already started to close down their operations.
In trade today, Simbhaoli Sugars has emerged as the weakest stock with loss of over 8%. However, the stock pared early losses and was trading with a loss of over 6%.
Other losers in the pack include Dalmia Bharat Sugar (down by 7.11%), Dwarikesh Sugar Industries (down 6.64%), Triveni Engineering & Industries (down 5.7%), Dhampur Sugar Mills (down 6.67 per cent) and others.
Meanwhile, selling pressure across sector has dragged indices lower. At 2:50 pm, Nifty was trading at 10,157.90 down by 90 points while Sensex was down over 269 points at 33045.7