Sensex at 40,000 as crude falls

Crude oil prices in the international markets were down to their lowest since March. This news was cheered by investors and the benchmark indices BSE Sensex and Nifty are trading comfortably above the 40,000 and 12,000 mark, respectively.

On going trade war between the US and China and the resultant slowdown in global growth is wearing out oil bulls conviction. Following recent data about the US crude output reaching record high triggered aggressive selling in crude in the global commodity markets pushing prices down further. Oil prices tanked 4 per cent on Thursday, although they managed to pare some of their losses. On Friday, Brent crude was trading below US$66 per barrel.

Two sectors who are direct beneficiaries of a drop in crude oil prices, namely paints and oil marketing companies (OMC), were gaining in morning trade. Among the top gainers on Nifty was leading paint maker Asian Paints trading at Rs. 1,424.00 per share, up by 3.69 per cent, while stock of OMCs, BPCL and IOC were up by 3 per cent. IT stocks TCS, TechMahindra and HCLTech were also among the gainers.

Paint industry uses crude oil derivatives as raw material, which account to 30 to 35 per cent of their raw material cost. The stock of Asian Paints, Berger Paints, Kansai Nerolac Paints gained on Friday and were up 3.44 per cent, 1.04 per cent and 8.84 per cent, respectively.

The aviation industry also directly benefit from a dip in oil prices. Airline stocks namely Spicejet was trading at Rs. 144.95, up by 0.31 per cent, while InterGlobe Aviation was quoting Rs. 1,670.55 per share, up by 1.75 per cent.

At 11:36 hours, the BSE Sensex was at 40,094.72, up by 262.75 points or 0.66 per cent, while Nifty50 was at 12,026.50, up by 80.60 or 0.67 per cent. Nifty Bank was at 31,674.45, up by 137.35 points or 0.44 per cent.