Paint Stocks Surge as Crude Oil Prices Crash Nearly 4%; Berger Paints, Asian Paints Among Top Gainers

On Monday, May 5, shares of several Indian paint companies—including Asian Paints, Berger Paints, and Kansai Nerolac—traded higher in response to a sharp fall in global crude oil prices. The broader Indian stock market also saw positive momentum. Oil prices drop was mainly due to an increase in global crude supply, which has led to expectations of reduced costs for industries that depend on oil-based raw materials.

Why Lower Crude Oil Prices Help the Paint Sector

India depends heavily on imported crude oil, with nearly 85% of its crude requirements coming from abroad. Paint manufacturers use crude oil derivatives as essential raw materials. When crude oil becomes cheaper, the cost of these raw materials also drops. This reduces the input costs for paint companies, allowing them to improve their gross margins and overall profitability. In some cases, this can also result in better product pricing for consumers.

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Stock Market Gains for Paint Companies

The fall in oil prices led to a positive reaction in the stock prices of paint companies:

• Berger Paints (India) share price rose 2.40% to ₹556.60 per share.

• Asian Paints share price increased 2.16% to ₹2,461.

• Akzo Nobel India share price advanced 2.27% to ₹3,528.

• Shalimar Paints share price gained 1.15%, while Kamdhenu Ventures India rose 0.64%.

• Kansai Nerolac Paints share price also moved up by 0.61%, reaching ₹256.30.

Global Crude Oil Prices Tumble

Crude oil prices dropped sharply on Monday after OPEC+ (a coalition of oil-producing nations that includes OPEC members and allies like Russia) announced a production increase of 411,000 barrels per day starting from June. The goal behind the move is reportedly to penalise members such as Iraq and Kazakhstan who have been producing more oil than agreed upon in previous deals.

As a result of this announcement:

• Brent crude futures fell 3.60%, dropping below $60 per barrel for the first time since February 2021, hitting a low of $58.83.

• WTI crude futures slipped 3.90%, reaching $55.83 per barrel.

Geopolitical Risks 

Despite falling oil prices, tensions in the Middle East continue to add uncertainty to the market. Israeli Prime Minister Benjamin Netanyahu has vowed to retaliate against the Houthi rebels and their supporter Iran, after a missile landed near Israel’s main airport. In response, Iranian Defence Minister Aziz Nasirzadeh warned that Iran would strike back if attacked by the United States or Israel.

Conclusion

The fall in crude oil prices has given a strong boost to paint stocks, which are highly sensitive to input cost changes. As global oil supply rises and prices decline, Indian paint companies like Berger Paints, Asian Paints, and Kansai Nerolac are likely to benefit from improved margins and profitability. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.                               

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