Crude Oil Near $85 Puts Pressure on Aviation, Paint, Tyre Stocks; IndiGo, Asian Paints, BPCL Decline.

Higher crude oil prices weighed on shares of aviation, oil marketing, paint and tyre companies on Tuesday, July 14, as escalating geopolitical tensions in West Asia fuelled concerns over potential disruptions to global oil supplies.

Benchmark Brent crude surged more than 14% over the past two sessions to trade above $85 per barrel, prompting investors to reassess sectors that are most vulnerable to rising energy costs.

The weakness was visible across the market, with shares of InterGlobe Aviation (IndiGo), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), Indian Oil Corporation (IOCL), Asian Paints, Berger Paints and CEAT among the key losers during the session.

Why are crude oil prices rising?

Global crude oil prices rallied after fresh military developments in West Asia intensified concerns over supply disruptions.

The latest escalation between the United States and Iran has raised fears over the movement of crude shipments through the region, a key artery for global energy supplies. The renewed geopolitical uncertainty pushed Brent crude above the $85-per-barrel mark, as traders priced in the possibility of tighter supplies.

Higher crude prices typically increase input costs for several sectors in India, which imports more than 85% of its crude oil requirement, making movements in global oil prices a key factor for inflation and corporate earnings.

Aviation, oil marketing, paint and tyre stocks fall

Shares of oil-sensitive sectors remained under pressure throughout the session as investors assessed the impact of higher crude prices on corporate margins.

Oil marketing companies (OMCs) declined on concerns that rising crude prices could compress marketing margins if retail fuel prices are not revised in line with higher input costs. BPCL fell nearly 2% to an intraday low of ₹302.05, while HPCL slipped to ₹383.30 and IOCL declined to ₹137.33.

Aviation stocks also traded lower as higher crude prices are expected to increase aviation turbine fuel (ATF) costs. InterGlobe Aviation (IndiGo) dropped more than 3% to an intraday low of ₹5,064.50, while SpiceJet fell around 1.5% to ₹10.96.

Among paint companies, Asian Paints declined around 3% to ₹2,579.90. Berger Paints India fell about 2% to ₹484.35, while Kansai Nerolac Paints and Indigo Paints lost 1.3% and 3%, respectively.

Tyre makers were also under pressure as crude-linked raw materials such as synthetic rubber become more expensive when oil prices rise. CEAT declined around 3% to ₹3,761, Apollo Tyres fell 3.4% to ₹425.50, Balkrishna Industries slipped 1.3% to ₹2,187, while MRF traded about 1% lower at ₹1,30,115.

Kotak Neo on Crude Oil: Key Risks for India's Economy

A report by Kotak Neo Research said the recent re-escalation in West Asia has pushed crude oil prices closer to $80 per barrel, but noted that markets appear to have already priced in a certain degree of geopolitical risk.

The report suggests that if crude oil averages around $85 per barrel, India's current account deficit (CAD) is likely to remain at around 1.5% of GDP in FY27. It also estimates a balance of payments (BoP) surplus of around $4.8 billion, supported by RBI foreign exchange measures and potential upside from debt inflows.

Kotak Neo added that it remains watchful of key risks, including the pace of foreign currency non-resident [FCNR(B)] deposits, external borrowings, further geopolitical escalation in West Asia and the expected announcement on India's inclusion in the Bloomberg Global Aggregate Bond Index.

June trade deficit widens on higher imports

The Kotak Neo report also highlighted that India's trade deficit widened to $30.4 billion in June, driven by stronger non-oil, non-gold imports. Goods imports rose 31% year-on-year to $70.8 billion, while exports increased 16% to $40.4 billion, led by robust growth in engineering goods, electronics and chemicals.

Oil imports increased 40% year-on-year during the month, while non-oil, non-gold imports were supported by higher electronics and machinery imports, underscoring the sensitivity of India's external sector to movements in global crude oil prices.

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