Sugar scrips surged in early trades on Friday on good buying support following reports that Parliament has passed the Essential Commodities (Amendment) Bill 2003.

As a result, Balrampur Chini (up 11.66% to Rs 118.75), Bannari Amman (up 9.95% to Rs 104.40) and Dhampur Sugar (up 16.42% to Rs 11.70) posted gains.

Others like Bajaj Hindustan, Oudh Sugar Mills, Rajshree Sugars, Rana Sugars, Siel and Ugar Sugar Works did not witness any buying support.

The rise in sugar scrips was purely attributed to the passage of the Essential Commodities (Amendment) Bill 2003 in Parliament.

The Bill is expected to improve the sugar industry's sales realisations. Sugar prices are expected to improve in the coming days. Currently, the prices are depressed and volatile, but with the passage of the Bill, it is expected that they will recover.

However, analysts said that sugar prices may rise only after some time as currently there were huge stocks with manufacturers. But the sentiment towards sugar scrips will improve following the passage of the Bill, they added.

Meanwhile, the sugar companies are also expected to gain from the ethanol production and power co-generation. The Centre's announcement to blend petrol with 10% ethanol on a nation-wide basis in about two years to reduce the country's dependence on imported crude oil, is also expected to help sugar companies.

From January 2003, it has been made compulsory for petrol stations to sell petrol with 5% ethanol in nine states. The states include the highly industrialised Maharashtra and Gujarat, and the relatively well off Karnataka, Punjab and Haryana. All the nine states together consume 60% of oil products sold in India. Oil companies have already started blending ethanol with petrol.

On Thursday, the sugar sector, comprising 15 companies, recorded a 1.3% rise in market capitalisation (m-cap) to Rs 489.47 crore (Rs 4.89 billion). In the last one year, the m-cap of sugar companies eroded by 21.3% from Rs 621.88 crore (Rs 6.21 billion).