Mint Quick Edit | What explains Tuesday’s sugar rush?

4 months ago 7

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The output limit was imposed to ensure that retail demand for sugar didn’t go unmet in case of sugarcane diversion to ethanol production. (Bloomberg)

Summary

Amid a weak equity market, sugar business stocks zoomed as India’s government said it would lift its cap on ethanol made from sugarcane. Behind this exultation lies a tale of market intervention we could do without.

Sugar stocks defied the broader equity market’s weakness on Tuesday, many of them ending with double-digit gains as investors celebrated the government’s decision to lift its cap on ethanol production from sugarcane, with effect from November.

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