Jute stocks bag good gains

Yesterday, Ludlow Jute breached the 5% upper circuit at Rs.65.15 and today, it once again breached the UC at Rs.68.40. For the past 2-3 days, it has new hitting new 52-week highs too. Another ‘jute’ company, Gloster Ltd, hit an intra day high of Rs.487, up over 10% and closer to its 52-week high of Rs.501. Cheviot is also in the limelight, hitting an intra day high at Rs.1030.25, just Rs.16 away from its 52-week high of Rs.1046.

The Govt seems to be taking a lot of measures to reinvent and breathe life into the jute industry. First was the scrapping of import licenses which will help domestic industry and then the Jute Advisory Board (JAB) said that it expects raw jute prices to soar on the back of higher estimates of domestic consumption of the fibre crop.  JAB expects domestic consumption of raw jute at 0.2 million bales, 100% higher than the previous financial year.

Over and above all this, the Govt yesterday approved mandatory use of jute packaging material for foodgrains and sugar. It has said that at least 90% of foodgrain output and 20% of sugar production will be reserved for packaging in jute, for a period of July 1, 2015 to June 30, 2016. This is expected to boost demand and that’s precisely why jute stocks are in the reckoning today, in an otherwise lackluster market.