The recent fall in crude oil prices is positive for companies in industries like oil marketing, paints, tyres, speciality chemicals, plastic piping, aviation, and cement who use crude oil as a key raw material.
Analysts say shares of companies like Astral Poly, Asian Paints, Navin Fluorine, Aarti Industries, Indian Oil, BPCL, HPCL, Atul, Sudarshan Chemical, Supreme Industries, JK Tyres, UltraTech Cement, CEAT and Finolex Industries can be accumulated to play the falling crude trend.
“Fall in crude prices is likely to be beneficial for companies in the speciality chemicals space such as Aarti Industries, Atul, Sudarshan Chemical and also for plastic piping companies such as Astral Poly Technik and Supreme Industries as it will ease the input cost pressures and enhance the gross margins,” the Economic Times quoted Rishab Bothra, senior research analyst at Sharekhan as saying. “However the same is expected to be seen with a lag effect,” Bothra added.
Worth mentioning here is that Brent crude has crashed 21% to $52.3 per barrel since the beginning of the year to hit a 30-month low. The increase in oil production in the US, Brazil, Canada and Norway and the declining demand from China, after coronavirus outbreak, is adding to the excess supply of oil.
According to analysts, Brent crude is likely to stay around $50 per barrel levels until the demand outlook in China and across the world improves, which may take another 6-12 months.