Oil & gas, paint, tyre stocks in focus on rising crude oil prices; ONGC gains while BPCL among largest Nifty 50 losers

Stock Market Today: Shares of oil & gas producers, paint and tyre companies were in focus on Thursday, 3 October, following a sharp rise in crude oil prices.

Brent crude prices rose significantly amidst the escalation in conflict in the Middle East, with concerns that Iran and Israel may be on the cusp of a full-blown war. Amid this, Brent crude oil prices soared from $70 a barrel on Tuesday to $75 a barrel today.

The rising crude prices, while a positive for net realisations of oil and gas producers, remain unfavourable for oil marketing companies (OMCs), paints and tyre manufacturers.

Oil and Natural Gas Corporation share price gained up to 2% in opening trades on Thursday and was amongst the largest Nifty 50 gainers. On the other hand, Bharat Petroleum Corporation share price declined up to 4% to emerge as the largest loser in the Nifty 50 pack.

Hindustan Petroleum Corporation share price dipped more than 5% in morning trade today while Indian Oil Corporation also saw a 4% decline. 

Among paint stocks, Asian Paints share price dipped close to 3%, Berger Paints India share price slipped more than 6% and Kansai Nerolac Paints share price lost 2%.

Apollo Tyres, JK Tyre & Industries, MRF, and Ceat share prices among others saw declines of up to 3-4%.

For oil & gas marketing companies, such as Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation, any rise in crude prices leads to rising concerns on marketing margins i.e. margins these companies earn on selling auto fuel at retail outlets.

Currently, oil marketing companies' margins are over ₹10 a litre, as per Motilal Oswal Financial Services analysts.

Since OMCs are earning much above the normalised ₹3-4 a litre as marketing margins, some rise in crude prices may not have a significant impact on the earnings outlook till Brent crude prices rise above $80 a litre or the OMCs have to cut retail auto fuel prices, said analysts at Motilal Oswal Financial Services.

For paint and tyre companies, investors will keep an eye on input costs amid a strong demand environment.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions