Market Movers: Surging sugar stocks sweeten the rally; Tata Motors gets a shock

NEW DELHI: Many on Dalal Street have been bullish on sugar stocks for a while now and they rallied again on Tuesday, sweetening the marketwide rally that has defied concerns over sharply rising Covid-19 cases in the country.

The main driver of sugar stocks has been the government's increased thrust on ethanol blending in fuel. Ethanol is a byproduct for sugar companies and India has plans to blend 20 per cent ethanol in petrol and diesel by 2025, leading to more upside for such stocks.

Balrampur Chini Mills was one of the major gainers, rising 14 per cent, while DCM Shriram rose 9 per cent. KM Sugar Mills, Renuka Sugars and Dwarikesh Sugar were others that hit their respective upper circuits.

TaMo Conundrum
Tata Motors became the first Nifty stock to get a ‘Sell’ rating in 2022 after CLSA downgraded it from ‘Buy’ saying, the company's India passenger vehicle business was overvalued during the last round of PE investment. The stock had seen many upgrades following the investment round and CLSA’s downgrade puts them at odds.

Incidentally, this comes after the company became the second-largest selling brand of passenger vehicles in India, overtaking Hyundai. The stock fell about 2 per cent following the downgrade, wiping much of the gains registered a day prior.

Though, the CLSA report had a silver lining. It sees Tata Motors domestic CV business in a sweet spot and is projected that the segment will post strong growth over the next three years and gain market share.

Small Size, Big Streak
Smallcap stocks have shown remarkable resilience and rallied in not just the last three sessions when the broader market has rallied but even when they fell. In fact, Nifty Smallcap has climbed for seven straight sessions now, gaining about 6 per cent.

The smallcap index has some of the top 100 smallcap companies. Investors have become bullish on them after a recent correction that cooled off their valuations. Moreover, they expect these companies to outperform during the earnings season.