Asian Paints, Berger, Nerolac Shares Rise As Oil Prices Decline

Shares of Asian Paints Ltd., Berger Paints Ltd. and Kansai Nerolac Ltd., among other paint companies, advanced in early trade on Wednesday after the international benchmark Brent crude slipped to trade at the lowest level since 2021. The price dropped below the crucial $70 per barrel mark, over weak demand outlook and oversupply concerns.

The Organisation of Petroleum Exporting Countries maintained its demand forecast steady, despite extending its supply constraints for an additional two months.

In its monthly report, the group projected that global oil demand will increase by 2.03 million barrels per day in 2024, a reduction from the 2.11 million bpd growth it anticipated last month. Additionally, OPEC revised its 2025 global demand growth estimate down to 1.74 million bpd.

The International Energy Agency—which previously forecast a surplus next year—is due to publish its own monthly report this week. 

Paint companies use crude derivatives as raw materials, whose cost contributes to nearly half of their expenses. Crude's share in raw material costs is around 30%. Lower oil prices translate to higher operating margin for paint-makers.

Shares of sector heavyweight Asian Paints rose 2% to Rs 3,368.85 per share intraday, the highest since January.

Berger Paints stock gained nearly 3% to a seven-month high of Rs 618.9 per share, while Kansai Nerolac shares also gained 3% to Rs 317.55 apiece. Indigo Paints Ltd. rose 1% to Rs 4,889.9 apiece.

The benchmark Nifty 50 was trading 0.08% lower, while Nifty Energy was flat, intraday.