Have sugar stocks bottomed out? SP Tulsian answers

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In an exclusive interview with CNBC-TV18, SP Tulsian, sptulsian.com, speaks about various stocks and gives his outlook going forward.

Here is a verbatim transcript of the exclusive interview with SP Tulsian on CNBC-TV18. Also watch the accompanying video.

Q: It has been a one way street, the big fall in sugar stocks, is this just a dead cat bounce or do you think they are nearing bottoming out levels?

A: There are couples of reasons for that. Firstly, I think a lot of shorts have been created on the sugar stocks and yesterday there has been a rise of about Re 1 in the realization of sugar in Maharasthra and southern mills. In sympathy with that there has been a quarter rupee increase in Uttar Pradesh(UP) also, it has risen by about 25 paise. When you talk to traders it seems that the inventory has got exhausted because inventory is getting depleted at the trader's level and now they are going for buying. Even on the release mechanism front, the government has again resorted back to 15 days, so there is no pressure on part of the sugar mills to liquidate their inventory on a weekly basis. UP is approaching for nearing the closure of the mills which is likely to happen by first week of April.

So these factors indicate that sugar price seems to have bottomed out. I do not think that things will be falling from here on in the commodity prices and if that happens even the fall in the sugar stocks should take a halt.