Crude-Sensitive Stocks Rally As Oil Prices Slip Below $100

Shares of companies linked closely to crude oil prices witnessed strong buying on Monday after international oil benchmarks dropped sharply amid hopes of easing supply concerns in West Asia. Oil marketing companies, tyre manufacturers, airlines and paint makers were among the major gainers in morning trade.

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Hindustan Petroleum Corporation (HPCL) rose more than 4.5% to ₹407.25 on the BSE, while Bharat Petroleum Corporation (BPCL) gained nearly 3.7% to ₹306.45. Indian Oil Corporation (IOC) also advanced over 3% to ₹144 during the session.

The rally followed a sharp correction in global crude prices. Brent crude futures declined 4.6% to $98.83 per barrel in Asian trade, while U.S. West Texas Intermediate (WTI) crude fell close to 5% to around $92 a barrel.

The fall in oil prices came after reports indicated progress in discussions between the U.S. and Iran over the reopening of the vital shipping route for global crude supplies, the Strait of Hormuz. The development raised expectations of improved oil flow from the Gulf region and reduced concerns around supply disruptions.

Tyre, Airline And Paint Stocks Gain

Tyre manufacturers also moved higher as lower crude prices are expected to reduce raw material costs. JK Tyre climbed 4.5%, while CEAT added 2.3%. Apollo Tyres traded nearly 2% higher in early deals.

Airline and paint stocks also attracted buying interest. InterGlobe Aviation, which operates IndiGo, rose 1.6%. Asian Paints and Berger Paints gained around 1% each, while Kansai Nerolac Paints also traded in positive territory.

Many raw materials used in tyres and paints are crude derivatives, making these sectors sensitive to movements in oil prices. Airlines also benefit from softer crude prices as aviation turbine fuel remains one of the largest operating costs for carriers.

OMCs Extend Recovery

The current rally in turn has facilitated a further rise in the fortunes of oil marketing companies, which have recently faced some difficulties on account of high crude prices and political tensions in West Asia.

Crude oil prices tend to benefit the OMCs because low prices can help lower inventory write-offs and ease cash flow pressures. Recent falls in international oil prices come amidst repeated hikes in the prices of petrol and diesel by fuel retailers in May amid rising costs.

Market sentiments have largely been favorable along with the strong performance of oil stocks. At about 9:20 am, the BSE Sensex was up by more than 835 points, while the NSE Nifty was up by more than 1% thanks to falling oil prices and other favorable trends.