As per a Reuters report, oil prices on Wednesday fell over 4 percent which is the lowest in over three months after a sharp decline in Chinese imports exacerbated concerns about oil demand and consequently triggered a heavy sell-off in the crude oil market followed by a steep build in US crude supplies.
In addition to this, the rising of OPEC exports eased fears about tight markets and as the dollar strengthened.
The global benchmark settled at $81.61 a barrel, down $3.57, or 4.2%, while U.S. West Texas Intermediate crude futures settled at $77.37 a barrel, down $3.45, or 4.3%, Reuters report added.
Here are five sectors and related stocks that soared on Wednesday’s trade after oil prices plunged 4%.
Oil Exploration and Production Industry
Petrochemicals and crude oil prices are inseparable. According to a McKinsey analysis, a 50% reduction in oil prices might result in a 50% drop in raw material spending at the beginning of a value chain and a 20% drop at the end of it.
Jindal Drilling Industries Ltd
On Wednesday’s trade, Jindal Drilling Industries shares gained up to 2.3 percent to Rs 689.25 per share from the previous close price.
Oil and Natural Gas Corporation Ltd
Oil and Natural Gas Corporation Ltd shares gained 1.7 percent to Rs 196.55 per share from the previous close price.
Refinery Industry
Hindustan Petroleum Corp Ltd(HPCL)
On Wednesday’s trade, HPCL shares gained up to 8.5 percent to Rs 302.40 per share from the previous close price.
Hindustan Petroleum Corporation Ltd operates India’s largest lube refinery, the company is engaged in the business of refining crude oil and marketing of petroleum products, and production of hydrocarbons.
Bharat Petroleum Corporation Ltd(BPCL)
Bharat Petroleum Corporation Ltd shares gained 4 percent to Rs 387.90 per share from the previous close price.
Tyres sector
The tyre sector is largely dependent on crude oil, comprising nearly 60% of the cost of production of a tyre.
Balkrishna Industries Ltd
Balkrishna Industries Ltd shares gained 2.7 percent to Rs 2,628.50 per share from the previous close price.
JK Tyre & Industries Ltd
On Wednesday’s trade, JK Tyre & Industries shares gained up to 7 percent to Rs 363.40 per share from the previous close price.
Paint Sector
Paint companies rely on crude oil derivatives for around 40 percent of their total raw materials.
When crude prices rise, it also lifts the input costs for paint companies, putting pressure on their profit margins. Hence, a rise in oil prices works negatively for paint manufacturers.
Asian Paints Ltd
On Wednesday’s trade, Asian Paints shares gained around 2 percent to Rs 3,098.95 per share from the previous close price.
Berger Paints India Ltd
Berger Paints India Ltd shares gained around 3 percent to Rs 588 per share from the previous close price.
Plastic Products
Plastic is derived from refined petroleum products. When crude oil price reduces, the cost of manufacturing plastics will drop significantly.
Supreme Industries Ltd
The company shares have gained around 2 percent to Rs 4,438.90 per share from the previous close price.
Astral Ltd
On Wednesday’s trade, Astral shares gained 1.2 percent to Rs 1,895 per share from the previous close price.
Written by Omkar Chitnis
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