Locals shy away, FIIs get in sugar stocks

Balrampur Chini BSE | NSE 30/05/12 Are Mutual Funds betting on Balrampur Chini? Other Stocks in this news Bajaj Hindusthan | Dwarikesh Sugar Industries | Dhampur Sugar Mills | Mawana Sugar | Oudh Sugar Mills | Shree Renuka Sugars | Simbhaoli Sugars | Uttam Sugar Mills | Ugar Sugar Works |

Between one 12000 points and the other, markets have not been very kind to 411 companies in the BSE 500 pack. These 411 stocks are trading at discount in the range of 0.10-59.25%. And the topmost loser is Uttam Sugar Mills followed by another sugar stock- Shree Renuka Sugars .

In fact of the 10 stocks that are trading at a 50% discount to their May 12 prices, five belong to the sugar sector. In the 40-50% range, as many as 11 sugar stocks have managed entry. This brings us to the question if one should celebrate this Diwali by buying into the sugar sector.

However, analysts don't seem to recommend sugar. Technical analyst Salil Sharma believes that one can enter the stock for long term, but advises against it for the short term.

Co_Name	Close as on
	21/09/06	12/5/2006	G/L (%)
Uttam Sugar Mill	184.65	453.15	-59.25
Shree Renuka Sug	608.85	1421.7	-57.17
Simbhaoli Sugar	71	153.05	-53.61
Oudh Sugar Mills	112.5	236.85	-52.50
Dhampur Sugar	108.3	225.3	-51.93
Ugar Sugar Works	21.55	42.55	-49.35
Balrampur Chini	96.2	188.85	-49.06
Sakthi Sugars	129.05	252.1	-48.81
Dwarikesh Sugar	116.2	217	-46.45
Triveni Engg.	66.2	121.35	-45.45
Bajaj Hindustan	309.05	517.15	-40.24

 

 

 

 

 

 

 

While the retailer investors  seem to have shunned the sugar stocks, FII s have chosen to enter the sector. Bajaj Hindustan ,  Balrampur Chini , Dwarikesh Sugar , Dhampur Sugar , Shree Renuka Sugars , Mawana Sugar and   Ugar Sugar have all generated FII interest. FIIs have bought between 0.02% and 30% in the June quarter in the above mentioned sugar stocks.

Bajaj Hindustan , which has taken a severe beating with a negative return of over 40% in the period between May 12, 2006 and September 21, 2006, FIIs have bought over 30% in the quarter ending June 2006. 

 

Co_Name	FIIs in June qtr	%loss in 6/06 qtr price
Bajaj Hindustan	30.07%	-13.67
Balrampur Chini	20.45%	-11.11
Dhampur Sugar	13.55%	-13.18
Dwarikesh Sugar	14.49%	-5.8
Mawana Sugar	8.78%	-3.96
Sree Renuka	9.28%	N/A
Ugar Sugar	0.02%	-7.15

 

 

 

 

 

 

Analysing the phenomenon, investment advisor SP Tulsian said, "In the short run sugar prices are falling domestically. Internationally, the prices have settled at USD 400, which is a very good price." He attributes the  dullness in sugar prices to the government's need to control all essential commodities.

On FIIs increasing their share, Tulsian says, "In the domestic market, sugar prices are a bit subdued that is why local investors are not taking a call on the sugar stocks. FIIs are taking a long term call and hence are bullish on these stocks."  He further adds that prices may not rise after Diwali. "I don't say it will rise, but it won't fall either. Even if they realize Rs 17/kg for this coming season, that would be a reasonable price for the sugar companies because sugar production is going to increase by about 25%".

However, he cautions investors by saying not to invest in the sector if one does not have long term view.

By-Jhini Sinha Phira