BPCL, HPCL and IOC gain, while paints, tyres and chemical stocks fall as crude oil prices drop 2%

Oil sensitive stocks will remain in focus throughout the trading session on Monday after crude oil prices staged a pullback from four-month highs. Oil price volatility touched its peak after bouncing back over 63% in just four months, from $70 per barrel in July to over $115 per barrel in October. Crude oil supply from the region, touched its pre-conflict level in the last week of September, but soon faced headwinds as Houthis attacked Saudi Arabia, raising the fears of supply disruption.

As the unceratinity remains at its peak in the Middle East region, the supply disruption fears refuse to abate. In the past few weeks, Houthis have intensified their offensive against the Saudi Arabia, by hitting their critical energy infrastructure. Till now, Houthi rebels have attacked Saudi Arabia’s Jeddah airport and downed their one of the fighter jets. Besides this, they have also hit Saudi Aramco’s Shaybah oil field killing two personnels.

On the other hand, Iran continues to attack illegal oil shipping vessels passing through the Strait of Hormuz, keeping the supply from the major trade route under constant threat of disruption.

Oil sensitive stocks in focus

Despite a 2% drop in crude oil prices, the broader pessimism in the Indian stock markets continued to pull the oil sensitive stocks lower on Monday. Shares of Asian Paints, Berger Paints, Indigo Paints fell as much as 2% on Monday morning, shrugging off oil price fall optimism.

Additionally, tyre stocks like JK Tyres, Apollo Tyres, MRF and Balkrishna Industries also continued to trade in deep red, plunging as much as 3% on Monday morning.

However, oil marketing companies like Bharta Petroleum, Hindustan Petroleum and Indian Oil opened in green with gains of up to 2.4%.

At the broad level, all the oil sensitive stocks have witnessed a steep fall in the recent months after crude oil prices bounced from the lows.

How have oil sensitive stocks performed in since the conflict?

Since the crisis began in March, the oil sensitive stocks have largely underperformed the benchmark indices and have been a major sentiment driver for broader markets. Among the major losers, the oil marketing companies like Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation have fallen up to ~30%. Whereas, paint stocks like Asian Paints, Berger Paints, Indigo Paints and Kansai Nerolac posted mixed performances, by delivering more returns in the range of -4% to +17% in the same period. The mixed performance was preceded by sharp correction in the overall sector.

Meanwhile, tyre stocks also witnessed poor performance, with JK Tyres falling the most at -38% amongst other peers, while Apollo Tyres, MRF, and Balksrishna Industries fell almost 17% in the same period.