Balrampur Chini, Shree Renuka, Triveni: Sugar stocks dip after 300% surge

Select sugar stocks like Balrampur Chini, Dwarikesh Sugar and Renuka had jumped up to 6-fold post the Covid-19 decline; However, off late the stocks have corrected sharply post export limitations.

The Indian stock market is currently facing a turbulent time with benchmark indices losing over 15 per cent so far this calendar year. The ongoing Ukraine war, high crude oil prices, soaring inflation and global monetary tightening are some of the key concerns that weigh on the market sentiment.

In its bid to combat the soaring inflation, the government has taken various steps in the recent days, such as changes in taxes, import, export levies and restrictions on exports.  One such restriction has been placed on sugar exports by placing it under “Restricted” category from “open category”. Herein, now the permission to export sugar will become mandatory from June 1, 2022 which otherwise was not obligatory in the past. 

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Following the news, sugar stocks have taken a severe beating in the last couple of trading sessions. Earlier in the last two years, sugar stocks witnessed unprecedented rally. Shares of Balrampur Chini Mills spiked over four times post Covid-19 decline, while Dwarikesh Sugar and Triveni Engineering & Industries jumped three times. Among others, Shree Renuka Sugars grew six-fold during the same period.

Is this just a price correction or is it time to book profits and exit? Here’s what the charts indicate for the key sugar stocks:

Balrampur Chini Mills (BALRAMCHIN)

Likely target: Rs 300

Downside potential: 17%

Shares of Balrampur Chini Mills have formed a “Head and Shoulder” pattern, which symbolises a bearish trend, shows the weekly chart. This breakdown suggests a downside towards Rs 300 mark, the next immediate support. The two major technical indicators, Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are trending in a negative crossover exhibiting a weaker trend. CLICK HERE FOR THE CHART

Shree Renuka Sugars Limited (RENUKA)

Outlook: Breach of 100-DMA could see decline of over 15 per cent

The stock is making an effort to hold the support of the 100-day moving average (DMA) positioned at Rs 40 level. However, the MACD indicates a down side. The indicator breached the zero line downward pointing a bearish signal. The next support for the stock exists at Rs 34 level, which is its 200-DMA. CLICK HERE FOR THE CHART

Dwarikesh Sugar Industries Limited (DWARKESH)

Likely target: Rs 80

Downside potential: 17%

There is a clear breakdown of “Double Top”, according to the daily chart. The RSI is very supportive of this formation and indicates a weakness under 50 value. The overall stock price action signals a drop to the next support of Rs 80 mark.  The immediate resistance comes at Rs 108 and Rs 115 levels. CLICK HERE FOR THE CHART

Triveni Engineering & Industries Limited (TRIVENI)

Outlook: Needs to hold the 200-DMA

At present, the counter is nearing the support of 200-DMA placed at Rs 240 level. The trend is sluggish and may see sideways trend till the support is held. The next drawback is set to emerge if the stock violates the 200-DMA. The following support comes at Rs 210. CLICK HERE FOR THE CHART

Avadh Sugar & Energy Limited (AVADHSUGAR)

Outlook:  Needs to hold 200-DMA

The stock reached near the support of 200-DMA set at Rs 545 and if it manages to defend this support, one cannot rule out the possibility of a pullback. However, if that does not happen, the stock could continue the follow-on selling pressure and may drift even lower. The next key support for areas for the stock is around Rs 500 - 480.  CLICK HERE FOR THE CHART