Airlines, OMCs, Paint, and Tyres Shares Fall as Brent Oil Edges Near $110 a Barrel

On Friday, September 11, shares of airline, oil marketing companies (OMCs), paint companies, and tyre manufacturing firms experienced a fall as crude oil continued its surge in prices and Brent oil edged near $110 a barrel. 

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Some of the companies whose shares fell include SpiceJet, Hindustan Petroleum Corporation (HPCL), and InterGlobe Aviation (IndiGo). These companies saw their stocks fall by 2%-5% due to tension in the Middle East which may cause disruption in oil supply. 

The weakness in these stock markets was notable mainly because of those businesses that use crude or fuel oil as their major expenses. 

SpiceJet Slides 4.6%, HPCL Plunges Over 3% 

The worst-performing stock from among those mentioned in the story was SpiceJet, which declined 4.6% to ₹8.48. 

HPCL lost 3.1% to ₹341.85, while Indiogo lost 1.7% to ₹4,861.50. 

The other oil marketing firms were trading lower. BPCL fell 1.9% to ₹297.30, while IOC fell 0.5% to ₹134.23. 

For airline companies, aviation turbine fuel represents a key component cost; hence, they become vulnerable to sudden spikes in the price of crude oil. Similarly, the refining and distribution companies may also find themselves under pressure when increases in international prices cannot be fully passed to customers. 

Stocks of Paints and Tyres Are Affected as Well 

The stock selling spread to paints and tyre stocks that make use of several petroleum-linked derivatives as raw materials. 

Kansai Nerolac Paints lost 1.8%, while Asian Paints lost 1.3%. Berger Paints fell by 0.3%. 

There was a fall in stocks for tyres as well with Apollo Tyres, JK Tyre & Industries and CEAT falling by 1%-1.6%. 

The fall in these industries occurred due to the latest increase in oil prices making input costs relevant once again. 

Brent Crude Hits $108.68 a Barrel 

Futures for Brent crude were up 1% at $108.68 a barrel in early Asian trade on Friday following a rally above 6% in the previous trading session. 

West Texas Intermediate crude from the US gained 1% to reach $103.45 a barrel. 

This was due to the growing violence at shipping routes in the Middle East, creating fears of supply disruptions to the energy sector. 

Houthis, who are allies of Iran, took control of Yemen’s port of Mocha on Thursday, creating another potential risk to shipping in the Red Sea. The supply risks are compounded with restrictions on the Strait of Hormuz and tanker attacks. 

ONGC and Oil India Move Higher 

While oil-sensitive consumer and downstream businesses declined, upstream oil producers moved in the opposite direction. 

ONGC shares gained 2.2% to ₹242.57, while Oil India rose 0.9% to ₹505. 

Higher crude prices can potentially improve realisations for upstream producers, setting their stock-price reaction apart from airlines, fuel retailers and crude-linked manufacturing businesses during Friday’s session. 

Broader Market Also Under Selling Pressure 

The decline in oil-sensitive stocks came amid weakness across the broader Indian equity market. 

At 9:25 am, the Sensex was down 633 points, or 0.85%, at 74,269. The Nifty 50 fell 213 points, or 0.91%, to 23,265. 

Market breadth was sharply negative, with 2,227 stocks declining against 719 advances. 

With Brent approaching $110 a barrel after a gain of more than 6% in the previous session, Friday’s early trade showed a clear divide across oil-sensitive sectors. Airlines, OMCs, paint and tyre companies moved lower, while upstream producers ONGC and Oil India gained as crude prices continued to rise.