OMCs gain on fall in crude prices; HPCL, BPCL, IOC advance up to 12%

For every $1 increase in crude oil prices, the impact on the current account deficit (CAD) is likely to be $1 billion
Shares of oil- related sectors such as oil marketing, paints and aviation companies rallied up to 12 per cent on  BSE in the morning trade, following a sharp fall in the global crude prices due to ongoing worries over weakening demand and oversupply.

This fall in crude prices reflected positively for oil marketing companies like Hindustan Petroleum Corporation (HPCL), Bharat Petroleum Corporation (BPCL) and Indian Oil Corporation (IOC), which rallied in the range of 10 per cent to 12 per cent during the intra-day trade.

Asian Paints, Berger Paints, Kansai Nerolac Paints and Shalimar Paints from the paints and InterGlobe Aviation (IndiGo), SpiceJet and Jet Airways from airline sector were up between 3 per cent and 5 per cent on the BSE. In comparison, the S&P BSE Sensex was down 0.05 per cent at 35,126 points at 09:54 am.

Oil markets struggled to find their footing on Wednesday after plunging by 7 per cent the previous session, with surging supply and the spectre of faltering demand keeping investors on edge. US West Texas Intermediate (WTI) crude oil futures were at $55.54 per barrel at 0159 GMT, down 15 cents from their last settlement. International benchmark Brent crude oil futures were up 4 cents at $65.51 per barrel. CLICK HERE FOR FULL REPORT

Most of the stocks from these sectors have underperformed broader index for last one year on rising crude prices. OMCs have seen a sharp correction in their stock prices due to high oil prices, rupee depreciation and the government asking them to absorb Re 1 per liter on the pricing of auto fuels.

A fall in crude oil prices helps to improve margins of paint companies, a major part of the raw material in paints is dependent on crude oil. The airline companies benefit from the fall in the price of aviation turbine fuel (ATF), which constitutes their main expense.

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