Mumbai: Dark clouds have once again gathered over the Indian economy as the crude oil prices, which have stayed benign for the last few years, have shot up overnight and raised the prospect of moving up on supply disruption.
The country buys over two-thirds of its oil, mostly from the Middle East, making it most vulnerable to any rise in oil price.
The equity market was quick to dump stocks that are sensitive to crude oil price. Oil marketing companies were hurt the most as the BSE Oil & Gas Index fell 1.61 per cent. The top losers included BPCL (-7.04 per cent), HPCL (-5.70 per cent), Castrol India (-3.55 per cent), Reliance Industries (-1.20 per cent) and IOC
(-1.15 per cent).
However, the oil producers gained, led by ONGC (1.40 per cent) and Oil India (0.26 per cent).
The airlines were also hit. Interglobe Aviation was down 2.71 per cent and Spicejet, down 3.95 per cent. Among the paint makers the losers included Asian Paints (-1.77 per cent) and Kansai Nerolac Paints (-1.25 per cent). Pidilite fell 1.37 per cent.
Sanctum Wealth Management, in a note, said, “Crude oil could spike higher in the short term... Wth a less hawkish administration in the White House, the likelihood of a dramatic Saudi retaliation looks unlikely. More likely, this was aimed at reducing the attractiveness of the Aramco IPO. The higher move in crude oil ironically benefits both Iran and Saudi.”
