Fertiliser Stocks Rally Amid Global Policy Shifts and Monsoon Boost

Fertiliser stocks witnessed a significant surge in their June 3 trading session. The rally in these stocks was driven by a mix of favorable international policy shifts and encouraging domestic weather updates. Key fertiliser stocks gained up to 15% during today’s session.

Market sentiment received a strong boost after the European Parliament passed a landmark bill to raise tariffs on fertiliser and agricultural imports from Russia and Belarus. The new legislation increases the tariff on specific fertilisers to nearly 100% by 2028 from the current 6.5%. The bill also includes a 50% duty on select agricultural products from the region.

With implementation slated to begin in July 2025, this phased tariff increase is expected to substantially reduce the competitiveness of Russian and Belarusian fertiliser exports, creating room for increased global demand from alternative suppliers, including Indian fertiliser producers.

Apart from this international factor, a domestic fire power also boosted the confidence. The rally gained support from the Indian Meteorological Department's (IMD) latest forecast, which signals an early arrival of the southwest monsoon across the country. The IMD has also projected above-normal rainfall for the 2025 season, which would be a favouring factor for the fertiliser industry, as early monsoon activity typically spurs sowing and boosts demand for agricultural inputs, especially fertilisers.

Both of the developments have together created a wave of optimism in the market regarding the fertiliser sector's growth prospects, hence making investors bet on stronger earnings potential for these firms. The positive growth outlook will be a result of both surge in internal consumption and potential export opportunities stemming from changing global trade dynamics.

Shares of Fertilisers and Chemicals Travancore (FACT) led the rally today, soaring by as much as 15%, while other sectoral players such as National Fertilisers, Madras Fertilisers, and Rashtriya Chemicals and Fertilizers (RCF) also posted impressive gains of 5-9%.