The Indian government on Tuesday said that India will provide an additional two million tonnes of wheat to bulk consumers such as flour millers, in order to lower prices which jumped to a record high last month.
This allocation will be over and above the allocation of 3 million tonnes announced last month and it could help in dampening local prices which are hovering above the government-fixed buying price of ₹ 21,250 ($ 256.77) per tonne.
India is the world’s second-biggest consumer of wheat and it banned exports in May 2022 after a sharp and sudden rise in temperatures and export demand picked up due to Russia’s invasion of Ukraine.
Wheat prices have corrected by nearly a quarter since the government announced the release of stocks in the open market last month. The latest announcement is beneficial for companies that are dependent on wheat for their products. An example of such a company is Britannia Industries, a company which makes a wide range of biscuits, cookies, bread and cakes.
Britannia Industries is one of the most popular defensive stocks in India. When the markets are volatile, many investors turn to defensive stocks as they are hardly impacted even when markets face sharp correction.
According to a recent report, brokerage firm Sharekhan by BNP Paribas has a buy call on the shares of Britannia Industries with a target price of ₹ 5285. This translates to an upside of 17.84% as compared to the company’s closing price of ₹ 4485.00 apiece on Wednesday.
Written by Simran Bafna
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