The Indian paints stocks on Wednesday (September 4) are performing on a green note despite the broader market trading on a negative note. This surge in the paint stocks comes on the back of the sharp decline in crude oil prices, offering a much-needed respite to the paint manufacturers who rely heavily on petrochemicals.
How does the crude oil price reflect the paint manufacturing industry?
In the production of paints, crude oil plays an important role such as the key raw materials like solvents, resins, and additives derived from it.
As the price of crude oil falls in the market, the cost of these materials declines, allowing paint manufacturers to reduce expenses and potentially increasing the profit margins.
How does the crude oil price reflect the paint manufacturing industry | File
This on a similar note has been reflected in the Indian Stock Market, where major paint companies have seen a significant surge in their stock prices today.
Market Snapshot
As of 12:58 PM IST, several leading paint stocks were trading on a positive note.
Indigo Paints
Indigo Paints shares were trading at Rs 1,525.00, an increase of 5.21 per cent.
Asian Paints
Asian Paints shares during the intraday trading rose to 2.81 per cent, bringing its share price to Rs 3,243.55.
Asian Paints Share performance |
Berger Paints
Berger Paints' stock also climbed by 3.22 per cent, reaching Rs 595.35 during the intraday trading.
Berger Paints Share performance |
Kansai Nerolac
Kansai Nerolac saw an uptick of 2.58 per cent, with its shares trading at Rs 306.40.
Kansai Nerolac Share performance |
Akzo Nobel India
Akzo Nobel India had a more modest gain of 1.66 per cent toRs 3,567.65 during the intraday session.
Akzo Nobel India Share performance |
Shalimar Paints
Similarly, Shalimar Paints recorded a 2.77 per cent surge, with its shares trading at Rs 137.33.
Shalimar Paints Share performance |
Why the Surge?
This significant surge in the paint stocks is due to the decline in the crude oil prices. On Tuesday, both Brent and WTI crude futures declined over 5 per cent. Some of the factors for the decline in the crude oil prices were was by concerns over weak demand from China and potential resolutions to disruptions in Libyan oil production.
Moreover, recession fears in the U.S., triggered by recent economic data, have also pressured crude prices, pushing them into negative territory for 2024.
On the other side of the picture, for the paint industry, this decline is a boon, reducing their input costs and enabling them to maintain healthy profit margins but oil drilling companies like ONGC and Oil India could face challenges as their profit margins are squeezed.
