Crude-sensitive stocks tumbled on June 3 as oil prices significantly increased amid rising global uncertainties. The shares of oil marketing companies (OMC), paint companies and tyre companies were among the stocks impacted by the rising oil prices.
Brent crude was inching towards $65 a barrel after the Organization of the Petroleum Exporting Countries (OPEC) and their allies agreed to a modest production increase of 411,000 barrels per day starting in July, lower than expectations. Additionally, fresh escalations in Russia-Ukraine's war and rising tensions between US and Iran further boosted oil prices.
Wildfires in Canada's oil-producing province of Alberta further raised concerns over supply, which in turn may have fueled the price rise for oil.
OMC stocks:
Oil marketing companies will likely face margin pressure as oil prices rise. Bharat Petroleum Corporation Limited (BPCL) shares tumbled around 2.4 percent to trade at Rs 209 apiece.
Hindustan Petroleum Corporation (HPCL) shares fell nearly 2 percent to trade at Rs 401 apiece. Indian Oil Corporation (IOC) shares also dropped nearly 2 percent to close at Rs 141 apiece.
Paint stocks:
Crude oil prices have a significant impact on the decorative paint industry, which is highly raw material-intensive. Paint manufacturing relies on over 300 components, the majority of which are petroleum-based. With raw materials accounting for 55-60 percent of input costs, fluctuations in crude prices directly influence gross margins for paint companies. Rising crude oil rates also hike the cost of producing items such as titanium dioxide, a key ingredient for white paint.
Indigo Paints shares dropped 1.6 percent to close at Rs 1,054 apiece, while Asian Paints shares ended the session in the red with marginal losses at Rs 2,258 apiece. Berger Paints , however, bucked the trend to close in the green with marginal gains at Rs 558 apiece.
Tyre stocks:
Brent crude is also a key source of synthetic rubber and various petrochemical products, which are essential for tyre manufacturing. As crude prices rise, the cost of these raw materials jumps, leading to higher production costs and resulting margin pressure for tyre companies.
Tyre stocks like MRF and Apollo Tyres closed in the red amid the sharp rise in oil prices. MRF, India's most expensive stock, dropped 2 percent to close at Rs 1.38 lakh per share. Notably, this implies a fall of Rs 2,650 apiece in one single session. Apollo Tyres shares meanwhile dropped 1.6 percent to end the session at Rs 464 apiece.
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