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Amidst gruesome punching on sensex and nifty
for the last few sessions, Govt. seems to be equally vigilant of the prevalent
condition. Taking it into the account,
Cabinet decision, which was much awaited, came at last to decontrol the
sugar. However, the decision could not
impact as much as expected; in the long run it is expected to give a sigh of
relief for Indian stock market. Investors as well as intraday traders
are chasing sugar stocks following the Cabinet decision on Thursday to
decontrol the sugar. It has also sent a
whirling wave to commodity market too, which was expecting it in January
itself.
What does it mean?
The government has abolished the 10
per cent levy quota for two years and removed monthly release mechanism under
which the movement decided what volume each mill could sell every month. The
brokerage houses feel that impact of sugar decontrol on the stock is likely to
be impressive enough to help stock market take u-turn. Even assuming no inflation in sugar prices,
the fair value impact of this decision is likely to be the modest one. Most of the intraday tips
happened to be sugar stock oriented.
Even Nifty futures and Nifty options have
recovered their premium. Sugar stocks
have just turned out to be favourite for intraday traders.
At the same time other schools of
thoughts suggest that the rally in sugar stocks is unlikely to sustain for long
as profit sales could cap further gains.
Sugar companies will now have increase in margins that is sure. Even in given situations, sugar stocks will
behave pretty much as they have been behaving, in line with fundamental and
supply demand and market pricing. In the
immediate assessment, it has impressed the technical analysts.
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