Sugar stocks continue to bleed for the straight second day, falling up to 4-8 per cent in Wednesday's trade after the government announced restrictions on sugar exports on Tuesday.
Dwarikesh Sugar Industries (down 8.97% ), Dalmia Bharat Sugar and Industries (down 7.44%), Triveni Engineering & Industries (down 7.60%), Balrampur Chini Mills (down 7.36%), Andhra Sugars (down 7.12%), Avadh Sugar & Energy (down 6.07%), and Uttam Sugar and mills (down 5.69%),
The Nifty and Sensex traded lower in Wednesday's trade. At 12:30 IST, the Nifty 50 index was down 46.40 points, or 0.29%, at 16,078.75. The S&P BSE Sensex was down 136.04 points, or 0.25%, at 53,915.97.
India plans to restrict sugar exports for the first time in six years to prevent a surge in domestic prices, potentially capping this season's exports at 10 million metric tonnes, according to a Reuters report.
The government has also asked exporters to seek its permission for any overseas shipments between June 1 and Oct. 31.
"The government is worried about food inflation, and that's why it is trying to ensure that enough sugar remains in the country to cater to the festival season," said a Mumbai-based dealer with a global trading firm.
India is the world's biggest sugar producer and the second biggest exporter behind Brazil. Reuters in March reported that India was planning to curb sugar exports to keep a lid on local prices and ensure steady supplies in the domestic market.
Benchmark white sugar prices in London (LSUc1) jumped more than 1% after India's decision.
Initially, India planned to cap sugar exports at 8 million tonnes, but the government later decided to allow mills to sell some more sugar on the world market as production estimates were revised upwards.
The Indian Sugar Mills Association, a producers' body, revised its output forecast to 35.5 million tonne, up from its previous estimate of 31 million tonne.
Indian mills have so far signed contracts to export 8.5 million tonne of sugar in the current 2021/22 marketing year without government subsidies.
Out of the contracted 8.5 million tonne, mills have already dispatched around 7.1 million tonne of the sweetener.
Exporters also said the decision to allow mills to export 10 million tonnes would help India sell a reasonably big quantity of sugar on the world market.
On the other hand, the government on Tuesday exempted customs duty and the Agri cess on importing 2 million tonnes of soybean and sunflower oil per year. The effective duty on crude palm oil, crude soybean, and sunflower till now was 5.50 per cent, which will come down to almost zero after Tuesday’s reduction for the two oils up to a fixed quantity.
