Crude-sensitive stocks rally as oil prices dip below $105 per barrel
InterGlobe Aviation and Hindustan Petroleum lead gains as falling oil prices boost sentiment for downstream companies.
Shares of InterGlobe Aviation, Bharat Petroleum Corporation, Indian Oil, and Hindustan Petroleum Corporation gained up to 4 per cent on Tuesday after oil prices dipped for a second consecutive session, according to The Economic Times. The rally occurred as Brent crude remained below the $105 per barrel mark.
In the trading session, InterGlobe Aviation shares jumped 4 per cent to Rs 5,118. Hindustan Petroleum shares rose 3.5 per cent to Rs 361 per share, while Bharat Petroleum Corporation gained 3 per cent to Rs 301 per share. Indian Oil shares were up 3 per cent, though Business Standard reported the stock fell 2.9 per cent to Rs 138.
Downstream stocks often face pressure when oil prices rise because increased input costs can squeeze margins if product pricing is regulated. Other crude-sensitive stocks such as Asian Paints, Kansai Nerolac Paints, CEAT, and Apollo Tyres also saw gains during the session.
The price movement comes amid ongoing peace talks regarding the US-Iran war. The Wall Street Journal reported that the United States struck Iran's Qeshm Island, which has raised concerns regarding potential disruptions to Middle East oil supplies.
Vipin Kumar, AVP research at Globe Capital Market, said oil marketing companies are witnessing a bounce-back rally due to the slide in crude prices. He noted that while the rally might continue in the short term, volatility is expected to remain elevated based on crude oil fluctuations.