CEAT, BPCL And HPCL Share Price Gain As Crude Oil Price Falls To Four-Month Low

Stocks exposed to movements in the crude oil price traded higher on 2 July, with tyre manufacturers and state-run oil marketing companies leading the gains after international oil prices extended their recent decline. The fall in the crude oil price raised expectations of lower input costs for several industries, including oil marketing, aviation and paints.

By around 10:00 am, CEAT share price had climbed 4.4%, making it one of the strongest performers in the market. JK Tyre share price rose more than 3%, while Apollo Tyres share price gained over 2%. Among oil marketing companies, BPCL share price and HPCL share price advanced 2.4% each, while IOC share price added nearly 2%.

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Crude Oil Price Extends Decline

The latest rally in crude-sensitive stocks followed another decline in the crude oil price. Brent crude price fell 77 cents, or 1.1%, to $70.80 a barrel, while U.S. West Texas Intermediate crude price declined 84 cents, or 1.2%, to $67.74 a barrel. Both benchmarks had also fallen by more than 1% in the previous session, leaving oil prices at their lowest levels in about four months.

The decline came after reports of positive progress in indirect discussions involving the U.S. and Iran over the Strait of Hormuz, easing concerns about potential supply disruptions through one of the world’s key oil shipping routes.

Crude-Linked Sectors Move Higher

Lower crude oil price levels generally benefit oil marketing companies by reducing working capital requirements and improving marketing margins. Tyre manufacturers also stand to gain as several of their raw materials, including carbon black and synthetic rubber, are linked to petroleum derivatives.

The positive sentiment extended to other sectors. InterGlobe Aviation share price traded 0.65% higher, while Asian Paints share price, Berger Paints share price and Kansai Nerolac share price also recorded gains during early trade.

In contrast, upstream energy companies moved lower. Oil India share price declined 0.9%, while ONGC share price slipped 0.2%, reflecting the impact that a weaker crude oil price can have on companies involved in oil exploration and production.

Broader Market Also Advances

Strength in crude sensitive stocks came amid gains seen in the overall market. At 10:00 am, the Sensex was up by 407 points or 0.5% to 77,330, whereas the Nifty 50 was up by 123 points to reach 24,129.

India VIX fell 3.6%, reflecting reduced volatility in the markets. Nifty Midcap 100 and Nifty Smallcap 100 were trading higher by 0.4% and 0.5%, respectively.

Traders would keep their focus on the trend of the international crude oil price as any continued weakness may impact the cost of doing business and profitability of companies operating in the sectors dependent upon petroleum products.