Crude oil is a key source of raw materials for paint companies because most of their products are petroleum-based derivatives. Therefore, expectations of rising oil prices putting pressure on their margins may dampen investor sentiment for these companies’ shares.
Shares of Asian Paint fell more than 3% to trade at Rs 2,298 apiece, the lowest level seen by the stock since June 27, 2025. The stock was among the top losers in the benchmark indices Sensex and Nifty.
Indigo Paint shares fell nearly 6% and Berger Paint shares fell more than 5% to hit their respective 52-week lows on Monday morning.
The Iran-Israel war has pushed up oil prices
Brent crude rose more than 6.5% to $77.63 a barrel, while WTI crude rose 65 to $71.23 a barrel, as seen around 11 a.m. More than 20% of the world’s oil passes through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Heavy missile attacks around the region have raised concerns about supply constraints, sending oil prices soaring.
According to a BBC report, at least three ships were attacked near the Strait of Hormuz today as Iran continues its retaliatory attacks in the Middle East. The report said that the international cargo was stalled while entering the area.
Paint companies are likely to face margin pressure due to rising oil prices
This has fueled concerns about supply disruptions, pushing up oil prices. “Upstream energy and defense may see relative support, while oil-sensitive sectors such as OMCs, paints, tyres, aviation and chemicals face margin pressure. Crude oil remains the key macro variable for Indian investment under the current bullish scenario,” JM Financial said in its latest note.
It is worth noting that it has not been officially confirmed whether the strait of Hormuz has been closed, which hinders the transportation of oil through it. Britain’s second largest bank Barclays raised its forecast for Brent crude oil futures to $100 per barrel on Saturday. “Oil markets may face their worst fears on Monday. As things stand, we think Brent could reach $100 (per barrel), as the market faces potential supply disruptions amid heightened security in the Middle East,” the bank said in its report.
Iran lies along the Strait of Hormuz, through which about a fifth of the world’s oil passes, Ali Waez, who heads the Iran Project at the International Crisis Group, said in a post on X: “Even a limited disruption could disrupt energy prices, oil inflation and global markets.”
It comes amid broader market weakness, with Indian benchmark indices opening sharply lower and wiping out a significant chunk of investors’ wealth. At the open, the Sensex fell 2,743 points to start the day at 78,543, while the Nifty 50 opened 519 points lower at 24,659. The sharp decline has wiped out more than Rs 7.8 lakh crore from the market capitalization of all BSE-listed companies.
(Disclaimer: The suggestions, recommendations, views and opinions given by the experts are their own. They do not represent the views of The Economic Times)
