Budget 2024: What should investors do with fertiliser, sugar stocks in the run-up to D-day?

Expert Amit Goel, Co-Founder & Chief Global Strategist at Pace 360, said that setting remunerative ethanol procurement prices will boost sugar cane diversion and will also be a support for mechanical harvesters. He was also for a more streamlined fertiliser subsidy system.

Historically, most stocks in the fertiliser and sugar sectors have largely been laggards over the last five years over two weeks in the run-up to the budget day.
In 2019 and 2024, there were interim budgets as both were general elections years. In the interim budget of 2024, and Mangalore Chemicals & Fertilizers, reported double-digit returns in two weeks prior to the budget day. While the former returned 41%, the latter witnessed a 13% rally in the price.

Other prominent stocks like Gujarat Narmada Valley Fertilizers and Chemicals (GNFC), Gujarat State Fertilizers and Chemicals (GSFC), , Fertilizers and Chemicals Travancore (FACT), (RCF) gave single-digit returns up to 6%.

Meanwhile, Chambal Fertilizers, and gave negative returns of up to 11%.



ETMarkets also analysed returns of 14 between 2019 and 2024 and the picture doesn't appear too rosy.

In the run up to the vote on account budget of 2024, certain stocks performed well over the two weeks while others were short of impressive.

Bajaj Hindustan Sugar, , KCP Sugar Industries Corporation and Simbhaoli Sugar delivered double digit returns between 12% and 16% in the said period. Others like , Ponni Sugars (Erode), , , and Triveni Engineering Industries yielded single-digit returns.

Stocks like , and also saw their price erode by up to 17%.

This article does not analyse triggers that could have engineered a rally or downfall in individual stocks.



What should investors do?

Goel recommends a wait and watch strategy till the announcements are made. "Hold on your new investment until the budget announcements are made. This allows you to see how the companies are impacted and make informed decisions based on the outcome," Goel said. He also advised investors to focus on long term agenda if investments have already been made by them.

A short-term budget-related dip might not be a cause for major concern, he opines as he stressed on weighing the impact one way or the other.

Meanwhile, Sreeram Ramdas, Vice President at Green Portfolio, said that his philosophy was not to predict policy and then take positions. However, he sees policies getting better for sugar and the ethanol sector, going ahead.

"Rather than betting on the budget, it would be wise to take positions in ethanol producing companies. Only 12% blending has been achieved which is well short of the 15% target. Whatever ethanol is being produced in the country; it is being bought up by the OMC’s," Ramdas said.

This analyst remains underweight on sugar, though he acknowledged taking exposure in a company coming up with a new ethanol capacity, without naming it.

Also Read: Budget 2024:

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)