According to market experts, a higher fertilizer subsidy is likely to help these companies recover some of the volumes lost over the past quarter due to price hikes, unseasonal rains, and delayed sowing of Rabi crops.
Shares of fertilizer producers were in demand on January 18 after media reports said that the government is planning to increase the subsidy offered to farmers on the purchase of fertilisers in the upcoming Union Budget 2022-23.
Shares of Khaitan Chemicals, Madras Fertilisers, FACT, Rashtriya Chemicals, National Fertilizers, Chambal Fertilisers and GSFC rose 1-12 percent in early deals on the National Stock Exchange.
The sector was able to sustain its gains despite the benchmark Nifty 50 index reversing all the gains seen earlier in the day.
The government is likely to announce fertilizer subsidy to the tune of Rs. 1.4-1.5 lakh crore (around $ 19 billion) as against Rs. 1.3 lakh crore budgeted last year.
The increase in Budgetary support for fertilisers comes in the backdrop of the repeal of the controversial farm laws that sparked protests from the farming community in many parts of India over the past two years and as the ruling Bharatiya Janata Party contests state elections in several key states like Uttar Pradesh.
The enhancement in subsidy is also seen to be timely given the burden of high fertilizer prices that farmers have had to bear due to price hikes undertaken by fertilizer producers to mitigate the impact of soaring raw material prices over the past 12 months.
Market experts said that a higher fertilizer subsidy is likely to help these companies recover some of the volumes lost over the past quarter due to price hikes, unseasonal rains, and delayed sowing of Rabi crops.