Sugar stocks: Balrampur Chini, Avadh Sugar, Bajaj Hindusthan, Dalmia Bharat jump up to 6%; is caution advised?

Shares of Avadh Sugar & Energy Ltd, Dhampure Specialty Sugars Ltd, Balrampur Chini Mills Ltd, Bannari Amman Sugars Ltd, Dalmia Bharat Sugar and Industries Ltd, Bajaj Hindusthan Sugar Ltd, Zuari Industries Ltd, Uttam Sugar Mills Ltd, Dhampur Bio Organics Ltd, DCM Shriram Industries Ltd and Mawana Sugars Ltd surged as much as 5.89 per cent on Tuesday.

Among them, Balrampur Chini, Avadh Sugar, Dalmia Bharat, Bajaj Hindusthan and Uttam Sugar Mills extended their gains for the second consecutive trading session.

Sharing a broader outlook on sugar stocks, a few market experts advised caution at current levels.

Ravi Singh, Chief Research Officer at Mastertrust, said the recent uptick in sugar stocks appears sentiment-driven rather than backed by any meaningful fundamental improvement. Investors should approach this rally with caution.

"On the domestic front, MSP-controlled pricing continues to cap revenue realisations for mills, while rising cane procurement costs are simultaneously compressing operating margins. The ethanol blending narrative, which drove a significant re-rating in sugar stocks over the past two years, is also losing momentum following recent policy target revisions, reducing earnings visibility," he also said.

"Stocks such as Balrampur Chini have been witnessing buying interest from lower levels, but the broader trend remains cautious and investors should tread carefully. The current price strength lacks strong volume conviction and institutional participation. Until there is clear policy support on ethanol pricing or a meaningful reduction in global supply, sugar stocks may remain a trading sell on rallies rather than a positional buy," Singh further stated.

Kranthi Bathini, Equity Strategist at WealthMills Securities, noted that sugar stocks moved higher following the recent uptick in crude oil prices. "That said, volatility in crude prices could put pressure on these companies in the short to medium term. Investors should remain cautious, as these counters may also witness heightened volatility," he added.