Synopsis
India imports roughly 85% of its crude oil. Every dollar increase in Brent oil price hits the import bill, pressures the rupee, and makes the domestic fuel mix expensive. Ethanol, produced from sugarcane, maize, or rice is blended into petrol as a partial substitute. The more expensive petrol becomes, the stronger the economic rationale for maximising that blend. From a modest 1.5% blending rate in 2014, it has effectively reached the 20% E20 target by mid-2025 (five years ahead of the original 2030 deadline). So the macro story is real. Ethanol matters. Blending is happening. The government is committed. However…
While it is not always possible, it is good to know the right reason for buying a stock. Especially if one is buying stock from a particular sector at a time when the whole market is under pressure. When Brent crude spiked to $119.50/barrel amid the US-Israel-Iran war, sugar stocks rallied 6-10% even as the broader market fell. This is a textbook example of the crude-ethanol-sugar linkage playing out. But does this linkage play on sentiment, or
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