Sugar stocks extend gains: What’s driving the rally?

Sugar stocks extended gains for the third straight session on Dalal Street, with shares of major sugar companies rising as tight supply, firm sugar prices and a recent government policy move lifted investor sentiment.

Concerns over the 2026-27 sugarcane crop have added to the positive sentiment, with patchy monsoon rainfall in some key sugar-producing regions raising questions over cane availability and crop output.

Meanwhile, strong festival-led demand has pushed sugar prices higher, with prices touching record levels.

This is a strong tailwind for millers such as Kothari Sugars, which surged 16 per cent to Rs 38.6. Dwarikesh Sugar added 9 per cent to Rs 58.45. Sakhti Sugars was up 8 per cent to Rs 22.80.

The rally was triggered last week when the government tightened stock-holding limits for bulk consumers such as bakeries, beverage makers and food processing companies to a maximum of 15 days' inventory, effective September 1, 2026.

Traders and investors read the planned move as a confirmation of tightening supply and raised stock prices.

India’s need for blending petrol with Ethanol, a cane by-product, has also diverted the crop towards factories producing ethanol rather than sugar, further tightening dwindling supplies.

The nation of over 1.4 billion people also kickstarts its six-month festival session in the first week of September, when demand for the sweetener rises sharply.