OMCs, paint, aviation stocks gain as Brent crude oil slips below $70/bbl

At close, Hindustan Petroleum Corporation (HPCL) was up 3.66 per cent, Bharat Petroleum Corporation (BPCL) was up 3.6 per cent and Indian Oil Corporation (IOC) was up 2.4 per cent

Oil marketing companies (OMCs), paint manufacturers, tyre producers, and aviation stocks witnessed significant gains as Brent crude oil prices slipped below $70 per barrel.

 

The price drop came after a double blow: The US imposed tariffs on Canada and Mexico, including energy imports, and OPEC+ — the group of major oil-producing nations including Russia — announced an output increase of 138,000 barrels per day, the first such hike since 2022.

 

Consequently, OMC stocks surged by up to 4.8 per cent, with Hindustan Petroleum Corporation (HPCL) climbing 3.86 per cent, Bharat Petroleum Corporation (BPCL) rising 3.6 per cent, and Indian Oil Corporation (IOC) gaining 2.94 per cent.

 

However, JM Financial noted that despite the recent price corrections and falling oil prices, OMCs’ refining and marketing margins are expected to return to historical levels due to potential government actions, like excise duty hikes or fuel price cuts.

 

The brokerage also expressed concerns over OMCs' ambitious capital expenditure plans, which may not always deliver long-term shareholder value.

 

Commenting on the crude oil price fall, Sabri Hazarika and Arya Patel of Emkay Research believe that OMCs would tend to gain, but price cuts and excise hike concerns will surface, coupled with heavy near-term inventory losses.

 

They noted that sectors further downstream, such as lubricants and airlines, stand to gain. A $70 per barrel price is still considered favourable for OMCs' autofuel margins, despite losses from LPG. 

 

 

Among the major gainers were Reliance Industries, up 2.96 per cent, Mangalore Refinery, up 6.35 per cent, and Chennai Petrochemicals, which saw a remarkable 11.69 per cent increase.

 

The paints sector, which has been grappling with weak demand, also benefitted from the fall in oil prices. Asian Paints surged 4.7 per cent increase, while Akzo Nobel, Berger Paints, and Kansai Nerolac gained between 2.2 per cent and 3.3 per cent.

 

As paint manufacturers rely heavily on petrochemicals derived from crude oil, falling oil prices support their production costs.

 

The tyre industry, which uses crude oil derivatives like synthetic rubber, also enjoyed a boost. Apollo Tyres led the pack with a 2.8 per cent rise, followed by Balkrishna Industries (up 2.13 per cent), MRF (up 1.9 per cent), JK Tyre (up 1.3 per cent), and Ceat (up 0.7 per cent).

 

Aviation stocks experienced a lift as well, with crude oil prices significantly impacting aviation turbine fuel costs. InterGlobe Aviation (IndiGo) rose 1.3 per cent, and SpiceJet soared 2.29 per cent. The aviation sector saw as much as a 5.1 per cent rise this session.