Castrol India, Asian Paints And Other Oil Sensitive Stocks Rally As Crude Prices Fall

Shares of paint, aviation and oil marketing companies (OMCs) such as Asian Paints, Bharat Petroleum, and Castrol India rallied on Thursday, March 6, as the prices of Brent crude slipped below the $70 per barrel mark. As a result, the Nifty Oil & Gas index, which comprises of 15 oil, gas, and petroleum stocks, surged 2.59 per cent in Thursday’s session, emerging as the top sectoral gainer.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Decline in Brent crude to below $70 is a macro positive for India which markets will discount positively.”

Crude Sensitive Stocks Rally

OMCs like Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL), Indian Oil, and Oil India surged between 2-5 per cent. Shares of Chennai Petroleum, a subsidiary of Indian Oil, also surged more than 12% with high trading volumes.

Shares of paint companies, which are heavily dependent on crude oil, like Asian paints, Berger Paints, Kansai Nerolac, Akzo Nobel India, Shalimar Paints and Indigo paints also jumped up to 4 per cent.

Aviation stocks like SpiceJet, IndiGo Aviation, TAAL Enterprises, and Taneja Aerospace also posted positive gains. Tyre manufacturers such as MRF, Apollo Tyres, Goodyear, JK Tyre, and Balkrishna Industries also traded in the green territory.

Other crude-sensitive stocks such as Castrol India also rallied over 10 per cent amid big volumes to hit its 5-month high, and petroleum speciality product producer Savita Oil Technologies zoomed over 5 per cent.

When oil prices fall, it generally leads to lower input costs for crude-dependent sectors like OMCs, Paints, Tyres, and Aviation. This reduction in costs can boost profit margins for companies in these industries.

Why Oil Prices Are Declining?

Brent crude’s price has been falling for the last four consecutive sessions, with the price hitting a 40-month low of $68.33 in the previous session. However, on March 6, Brent’s price recovered slightly, but was still below the $70-level.

Dayanand Mittal, a Research Analyst at JM Financial, explained that Brent crude oil prices have declined because OPEC+ decided to stick with its plan to gradually increase oil production by 2.2 million barrels per day (mmbpd) between April 2025 and September 2026. This increase means monthly production will rise by about 138,000 barrels per day, he said.

OPEC+ says the increase is based on a positive market outlook, but Mittal suggests it could be driven by pressure from the US President Donald Trump to lower oil prices. OPEC+ also said that they could pause or reverse the production hike depending on market conditions.

The increase in output is expected to be bad for oil prices since it could add to a global oil supply surplus of about 0.5 mmbpd in 2025, compared to a slight shortage in 2024, Mittal said. However, he expects the price of Brent to stabilise around $70 per barrel, as lower prices could hurt US shale oil investments and lead to a larger fiscal deficit for Saudi Arabia.