Israel-Iran Conflict: OMC, Gas, Aviation, Paint And Tyre Stocks Fall, While Upstream Oil Shares Gain

Israel-Iran War: Indian equity markets saw broad-based sectoral weakness on Friday, June 13, as Israel’s preemptive strikes on Iran’s nuclear facilities triggered a sharp rise in global crude oil prices. Both the globally traded oil futures contracts – Brent and WTI surged over 13 per cent in intraday trade. The spike in oil prices sparked a selloff in oil marketing companies (OMCs) and oil-dependent, while upstream oil producers gained. The rise in crude oil prices raises concerns over rising input costs and margin pressures for oil-dependent sectors like gas distribution, aviation, tyres and paints.

The Nifty Oil and Gas index, which tracks the performance of 15 stocks belonging to oil, gas and petroleum industries, slipped as much as 1.8 per cent in early trade.

OMC stocks: Shares of Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), and Indian Oil Corporation Ltd (IOCL) fell between 1 per cent to 3 per cent.

Gas stocks: Gas stocks such as Indraprastha Gas Ltd (IGL) fell nearly 5 per cent, Mahanagar Gas Ltd (MGL) shed 4.85 per cent, GAIL cracked 3.64 per cent, and Gujarat Gas slipped 2.55 per cent.

Aviation Stocks: Shares of InterGlobe Aviation (IndiGo) and SpiceJet fell over 5 per cent each amid concerns over potential airspace restrictions in the Middle East amid escalating geopolitical tensions between Israel and Iran. The uncertainty raised fears of disrupted flight routes and higher operating costs for carriers. The sell-off in aviation stocks was also under pressure as a London-bound Air India Dreamliner crashed on June 12 shortly after taking off from Ahmedabad, killing 241 people.

Tyre Stocks: Tyre manufacturers, including Ceat, MRF, Apollo Tyres, JK Tyre and Industries, Balkrishna Industries, and Goodyear India, all traded lower as investors expected crude-linked raw material to rise.

Paint Stocks: Shares of paint manufacturing companies like Asian Paints, Berger Paints, Kansai Nerolac, Indigo Paints, and Shalimar Paints declined owing to fears of rising raw material costs.

Upstream Oil Stocks: However, upstream oil producing companies like Oil India and Oil and Natural Gas Corporation (ONGC) gained as higher oil prices tend to improve their realisations from crude oil sales.