Trader’s View: Early signs visible of sugar stocks turning sweet again
The stock market has surged across sectors, but sugar stocks have lagged, remaining in consolidation for nearly 10 months after last year’s rally. However, recent gains of 5-8% hint at a potential revival. Favorable monsoon conditions and strong fundamentals are boosting optimism, with experts suggesting the sugar sector could be poised for gains in the coming weeks.
The stock market has witnessed euphoric moves across sectors over the past year, with many stocks becoming multibaggers, while posting strong gains from last year’s lows. There is one sector, however, that has not participated in this strong bull run: sugar.
Sugar stocks saw a strong rally till last year but since then have largely been in consolidation phase for nearly 10 months. Once a high-growth sector, the question now arises — when will the bull reawaken in the sugar sector?
Interestingly, the past week saw sugar stocks showing signs of upside momentum, with many gaining between 5-8%.
“This sector has faced multiple headwinds over the last few quarters, which caused it to lose its appeal and underperform despite the overall market rally. However, we are now seeing some fundamental green shoots in the sugar sector after an 11-month drought,” said Praveen Kumar Yadav, Independent Trader & Investor.
Yadav pointed out that favourable monsoon conditions have led to excess sugar production, which bodes well for the ethanol economy and sugar exports. He believes the sector is now poised for gains in the coming weeks.
