Shares of companies sensitive to crude oil prices came under pressure on Wednesday after a sharp rise in global oil prices triggered concerns over higher fuel costs and input expenses.
Oil marketing companies, airlines, tyre manufacturers and paint companies were among the major losers during early trade.
Bharat Petroleum Corporation (BPCL) declined more than 4%, while Hindustan Petroleum Corporation Ltd (HPCL) fell nearly 4% and Indian Oil Corporation (IOC) dropped over 3%.
Among Nifty 50 stocks, InterGlobe Aviation (IndiGo) slipped more than 2%, while Asian Paints declined around 1.5%.
The weakness extended across other crude-dependent sectors. Apollo Tyres fell close to 2%, while CEAT, JK Tyre & Industries and SpiceJet traded lower by around 1-2%.
In the paints segment, Kansai Nerolac Paints also witnessed losses, whereas Berger Paints remained largely unchanged.
In contrast, upstream oil exploration companies benefited from the rise in crude prices. Oil India and Oil and Natural Gas Corporation (ONGC) gained around 1% each, as higher international crude prices are expected to improve their revenue realisations.
The market reaction followed a jump in global crude prices after the United States launched military strikes against Iran following attacks on commercial vessels passing through the Strait of Hormuz. The development revived concerns over possible disruptions to global oil supplies.
Brent crude prices increased nearly 2% to around $75.5 per barrel, while US West Texas Intermediate (WTI) crude climbed to approximately $71.8 per barrel, extending gains from the previous session.
Higher crude prices generally put pressure on oil marketing companies as domestic fuel prices may not immediately adjust to rising international costs, reducing their marketing margins. Airlines are also directly impacted as aviation turbine fuel (ATF) accounts for a significant portion of their operating expenses.
Similarly, tyre manufacturers and paint companies face higher production costs as several raw materials used by these industries are derived from crude oil-based products.
Investors are closely tracking developments in the Middle East as any prolonged disruption in oil supply routes could keep energy prices elevated. The Strait of Hormuz remains a crucial global shipping channel, and prolonged uncertainty could continue to weigh on crude-dependent sectors.
