Sugar stocks trading weak on subsidy squeeze may be an anomaly

Sugar stocks retreated on Friday after the central government cut subsidy on sugar exports. The combined market capitalisation (m-cap) of the country's top 15 sugar manufacturers was down 2.8 per cent on average on Friday. In comparison, the benchmark BSE Sensex closed the day with gains of nearly 2 per cent to reclaim the 50,000-level. 

Friday's fall in sugar was, however, an aberration. The sector has been an outperformer due to a combination of higher sugar prices and low raw material (sugarcane) prices. 

The Uttar Pradesh (UP) government - the country's largest sugar-producing state - has not raised cane prices for four