Crude Oil Prices Fall: BPCL, HPCL, IndiGo Shares Gain as Crude-Sensitive Stocks Rally Up to 4%

Shares of crude oil-sensitive companies, including oil marketing firms, airlines, paint makers and tyre manufacturers, rallied on Monday after crude oil prices dropped sharply on hopes of easing tensions in West Asia.

Brent crude fell more than 5% to around $83.4 a barrel, while WTI crude dropped over 7% after US President Donald Trump said the US and Iran would resume peace talks. The decline came after crude prices had surged nearly 23% in July amid fears of supply disruptions through the Strait of Hormuz and the Red Sea.

According to Kotak Neo Research, the fall in crude prices reflects the unwinding of the geopolitical risk premium that had built up over the past month. The report noted that oil prices retreated after signs of renewed diplomacy between the US and Iran reduced concerns over supply disruptions.

India imports nearly 85% of its crude oil requirements, making lower oil prices a positive for several sectors that depend on fuel or petroleum-based raw materials.

Oil Marketing Companies, Airlines and Paint Stocks Gain

Among oil marketing companies, Indian Oil Corporation rose more than 2%, while BPCL and HPCL gained around 1% at the time of writing.

Lower crude prices reduce the cost of raw material for refiners and can support marketing and refining margins.

Airline stocks also traded higher, with InterGlobe Aviation, the parent of IndiGo, climbing more than 4%, while SpiceJet gained around 1%. Aviation turbine fuel is one of the largest operating costs for airlines, and softer crude prices typically improve profitability.

Paint companies also saw buying interest as crude-derived petrochemicals are key inputs in manufacturing paints. Asian Paints gained marginally around 1%, while Kansai Nerolac advanced more than 2%. Shalimar Paints was the top gainer and surged nearly 20% during the session.

Tyre manufacturers were among the other beneficiaries. JK Tyre, CEAT and Apollo Tyres gained up to 3% as lower crude prices reduce the cost of synthetic rubber and other petroleum-based inputs while also lowering transportation expenses.

Food delivery companies Eternal and Swiggy also traded higher as lower fuel prices are expected to reduce logistics and delivery costs.

What Investors Will Watch Next

Apart from crude prices, investors will monitor key global economic data this week, including the US non-farm payrolls report, unemployment rate, ADP employment data, JOLTS job openings and manufacturing PMI readings for cues on the health of the global economy.

Base metals traded higher after the US dollar weakened, while concerns over lower Chinese mine output supported zinc prices, Kotak Neo research noted. However, investors remained cautious after China refrained from announcing fresh economic stimulus despite signs of slowing growth.

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