The share prices of all mid-cap and small-cap domestic food processing companies have been rising.
On Wednesday, operators, mainly from Mumbai, were dabbling in stocks of companies such as KRBL, Heritage Foods, LT Foods, Ajanta Soya, Rohit Pulp, Sita Shree Foods and Kohinoor Foods, Foods & Inns, which rose 20 per cent in a single trading session.
Comparatively, the benchmark Sensex of the Bombay Stock Exchange was up only by 0.1 per cent and the BSE FMCG index fell by 0.4 per cent. According to market players, punters were pushing up the stocks in anticipation of a significant rise in demand ahead of the festive season, which begins with Ganesh Chaturthi and Eid-ul-Fitr this week, followed by Navratri in October, Diwali in November and Christmas in December.
“The demand for soya and castor seeds has increased. While the festive season is around the corner, exports of agri commodities are likely to rise in the coming months,” said an official of a domestic commodity exchange.
“Punters are pushing up share prices of these companies. However, it is not likely that domestic food inflation will rise significantly in the coming months; we have already seen double-digit food inflation,” said independent equity advisor S P Tulsian. Officials in the Commission for Agricultural Costs and Prices (CACP) feel domestic food prices will remain high till additional supply of food grain, especially wheat and rice, is made easily available.
Rice, wheat and pulses have a higher weightage in primary food articles, which contribute 15 points to the total inflation index. Some of the price increase is attributed to the minimum support price (MSP) rise. Market prices cannot rule below that, they added.