Mumbai: Agri-related companies, particularly those in the fertilizer sector, experienced strong increase in share values during Thursday's intraday trade, driven by market enthusiasm surrounding the recent hike in Minimum Support Price (MSP) for Kharif-season crops.
Leading the charge, shares of The Fertilisers and Chemicals Travancore (FACT) were locked at the 20 percent upper circuit limit, closing at Rs 1,093 per share. This surge marks a remarkable 71 percent increase over just 11 trading sessions.
Additionally, other stocks such as Rashtriya Chemicals & Fertilizers, National Fertilizers, Madras Fertilizers, Chambal Fertilisers & Chemicals, Gujarat State Fertilizers & Chemicals, Paradeep Phosphates, Zuari Industries, and Coromandel International have all gained between 3 percent and 19 percent in today's intraday trade.
The MSP raise will cost the government Rs two lakh crore and benefit farmers by an estimated Rs 35,000 crore compared to the previous season. It aims to increase earnings and improve economic conditions.
Notably, MSP increases range from 1.4 percent to 12.5 percent, with paddy, the most extensively farmed crop, experiencing a significant 5.35 percent boost. Oilseeds and pulses have received the highest suggested absolute increases.
Investor optimism stems from the notion that increasing MSPs will result in better disposable earnings for farmers, encouraging them to invest more in quality agricultural inputs. This assumption has boosted fertilizer company share prices, as they are expected to gain from increased demand.
Additionally, the MSP increase affects a wide range of crops, including paddy, ragi, bajra, jowar, maize, and cotton, and is part of the government's larger aim to boost agricultural output and farmer welfare.
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