Crude-linked stocks are trading higher on September 30 as oil prices continue to stay above $100 per barrel even as satellite imagery confirms a “major operational recovery” at the Yanbu and Muajjiz terminals, according to a Kpler note published Tuesday. This is on teh back of continued uncertainty on the issue of Strait of Hormuz.
Brent crude prices were little changed on Wednesday, remaining above the $100-a-barrel mark as uncertainty over the reopening of the Strait of Hormuz continued amid the ongoing US-Iran war. Brent crude was trading 0.31% higher at $102.90 a barrel, while WTI Crude was trading 0.1% lower at $89.28 a barrel according to Bloomberg.
The slight dip in crude oil prices boosted stocks across sectors that typically face higher energy and raw material costs when oil becomes more expensive.
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Oil Marketing Companies
Oil marketing companies (OMCs) emerged as key gainers, as lower crude prices can lift pressure on marketing margins. Shares of Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. rose 2.54% and 1.88% respectively. Indian Oil Corporation Ltd. jumped 2.86%.
Packaging and Adhesives
Packaging and adhesive manufacturers also traded higher, as these companies use polymers, polypropylene (PP) and high-density polyethylene (HDPE) as raw materials, which are heavily processed crude products.
Pidilite Industries Ltd. rose 1.71%, while Supreme Industries Ltd. rose 2.11%.
Tyre Makers
Tyre manufacturers also traded in green, given that a significant portion of their raw material costs is linked to crude-based products such as synthetic rubber and carbon black. MRF Ltd. rose marginally by 0.50%, while CEAT Ltd. jumped 1.77%.
Aviation & Travel
The aviation and travel sector was another major gainer. Higher crude prices increase aviation turbine fuel (ATF) costs, one of the largest expenses for airlines. Shares of InterGlobe Aviation Ltd. rose 1.57%, while SpiceJet Ltd. rose 1.77%.
In the travel space, Le Travenues Technology Ltd., the parent company of Ixigo, jumped 0.99%. Yatra Online Ltd. rose 2.38%, while TBO Tek Ltd. edged 0.07% higher.
Paints
Paint manufacturers, which use crude-derived inputs for a sizeable share of their raw material requirements, also traded higher.Berger Paints Ltd. rose the most, leading by 2.02%, followed by Indigo Paints Ltd trading 0.98% higher.
Asian Paints Ltd. rose 0.43%, Kansai Nerolac Paints Ltd. rose 0.42%, and Grasim Industries Ltd. rose marginally by 0.25%.
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