Sugar sector stocks rallied on Thursday on hopes of high demand during the festival season and reports that the government is working on a new subsidy scheme to be implemented in the current 2015-16 season to boost export of surplus sugar.

The forecasts for lower production and reports of government subsidies have boosted the price of  sugar in domestic markets, which, in turn, reflects the positive momentum in shares prices of listed sugar companies.

The Indian Sugar Mills Association have predicted a 5% reduced production at 28.3 million tonne due to insufficient rainfall.

K.M. Sugar Mills gained the most with a gain 15.11%, followed by EMPEE Sugars & Chemicals (11.52%), Dalmia Bharat Sugar and Industries (8.22%), Dwarikesh Sugar Industries (7.11%), Shree Renuka Sugars (6.92%), Dollex Industries (5.10%), Dhampure Speciality Sugars (4.94%) and E.I.D. Parry (India) (3.91%).