Asian Paints, IOC Share Price Climb as Crude Oil Slumps After OPEC+ Output Hike

Market Performance

On July 7, shares of Asian Paints and Indian Oil Corporation (IOC) saw upward movement as global crude oil prices dropped following a surprise production hike by OPEC+.

Despite cautious market sentiment, benchmark indices Sensex and Nifty traded flat, while select stocks in the oil and paint sectors outperformed.

• The IOC share price rose over 1% in early trade
• Asian Paints' share price also gained more than 1%
• HPCL posted a similar increase, nearly 1%
• Reliance Industries was up by 0.5%, trading at ₹1,535
• BPCL bucked the trend and was seen trading in the red

Main News

The rally in shares of paint manufacturers and oil marketing companies (OMCs) followed OPEC+ announcing a larger-than-expected increase in oil output for August.

• OPEC+ production hike: 5.48 lakh barrels per day (bpd)
• Compared to the previous monthly hike: 4.11 lakh bpd
• Brent crude futures fell by 0.73% to $67.80/barrel
• US WTI crude dropped 0.72%, trading around $66.02/barrel

The output boost was attributed to a steady global economic outlook and strong market fundamentals. This unexpected increase in supply drove oil prices down, easing cost pressures on companies dependent on crude-based raw materials.

Company Details

Indian Oil Corporation (IOC):

IOC, a major player in the oil marketing sector, is likely to gain from the decline in crude oil prices. Its stock moved over 1% higher in early trade as investors reacted positively to the news.

Asian Paints:

Asian Paints, a major consumer of crude derivatives, also gained over 1%, as declining oil prices may lead to reduced input costs. This directly supports the company's margin outlook.

Other stocks, such as Indigo Paints, also traded in the green, albeit with marginal gains.

Summary of the Article

• Asian Paints and IOC share prices rose after OPEC+ announced a bigger oil production hike
• Crude prices declined, lowering raw material costs for paint companies and OMCs
• IOC, HPCL, and Asian Paints gained over 1% in intraday trade
• The broader market remained muted, but select stocks benefited from the oil price correction
• The market welcomed OPEC+'s move as a positive signal for cost-sensitive industries