Oil-Sensitive Stocks Extend Rally As Brent Crude Falls 4.5%, OMCs, Aviation And Paint Shares Gain Up To 6.7%

Mumbai: Shares of oil marketing companies (OMCs), aviation firms and paint manufacturers extended their gains on Monday as global crude oil prices fell sharply.

Investors rushed to buy stocks that benefit from lower fuel and raw material costs, helping several companies end the day with strong gains.

The rally came after Brent crude, the global oil benchmark, dropped 4.55 percent to around $83.36 per barrel.

OMC Stocks Rise On Lower Oil Costs

Among oil marketing companies, shares of Hindustan Petroleum Corporation Limited climbed 3.36 percent, while Bharat Petroleum Corporation Limited gained 2.71 percent.

Shares of Indian Oil Corporation Limited also advanced 2.48 percent.

Lower crude prices generally reduce the cost of producing fuels such as petrol, diesel and LPG, which improves the earnings outlook for these companies.

Aviation Stocks Take Off

Airline stocks were among the biggest gainers during the session.

Shares of SpiceJet surged 6.72 percent, while InterGlobe Aviation rose 3.59 percent.

Fuel is one of the largest expenses for airlines. A decline in crude oil prices often leads to lower aviation turbine fuel (ATF) costs, improving profitability for the sector.

Paint Companies Also Benefit

Paint manufacturers also attracted investor interest.

Shares of JSW Paints gained 2.15 percent, while Indigo Paints rose 1.30 percent.

Shalimar Paints added 0.82 percent, Berger Paints India Limited climbed 0.75 percent, and Kansai Nerolac Paints Limited edged up 0.18 percent.

Many paint products use crude oil-based chemicals as raw materials. Lower oil prices can help reduce production costs and improve margins.

US-Iran Peace Hopes Lift Sentiment

Market sentiment improved after reports that the US and Iran had reached an agreement to end their 107-day conflict.

The proposed deal is expected to reopen the Strait of Hormuz, a crucial route through which nearly one-fifth of the world's oil supplies move.

A normalisation of shipping through the route could ease supply concerns, lower freight and insurance costs, and reduce pressure on global energy prices.

For India, which imports most of its crude oil requirements, lower oil prices are positive for inflation, trade balances and overall economic growth. Investors are betting that sectors linked to fuel consumption and petrochemical inputs will continue to benefit if crude prices remain under control.