Experts say that due to the rise in crude oil and gas prices, some stocks of this sector can prove to be winners. At the same time, the margin of paint companies using raw material will be affected.
Crude Stocks in Action: In the international market, Brent crude touched the level of $ 138 per barrel in intraday today. So far this year, there has been a rally of more than 60 percent in crude. At the same time, crude prices have more than doubled in the last 100 days. At present, due to the strong rise in crude, there is a lot of action in Oil & Gas and Paint stocks. Experts and brokerage houses say that the way crude oil and gas prices are rising, some stocks in this sector can prove to be winners in the future. At the same time, the margin of paint companies using raw material will be affected in the near term.
OIl & Gas, Paint Shares
ONGC is up about 4 percent today and it is trading at a price of Rs 172 near its 1-year high. Oil India Limited is up more than 2.5 percent and is at Rs 257. GAIL (India) is up 2.5 percent and is trading at Rs 161. There is flat trading in Indian Oil Corporation and it is at the level of Rs 113. RIL’s stock is down 2.5 percent at Rs 2268.
Asian Paints is down by 2.5 percent and is at the level of 2672. There is a weakness of more than 2 percent in Berger Paints India and it is at the level of 639. Kansai Nerolac Paints is down by 4 per cent and is at Rs 427. Whereas Indigo Paints is down 6.5 per cent and is trading at Rs 1,540.
Increased challenge for paint companies
Santosh Meena, Research Head, Swastika Investmart, says that a double whammy has been created for paint stocks. One, the crude has come to a boil and it is at its many-year high. Actually paint companies use crude oil as raw material. In such a situation, due to the cost of crude, their margins can be seen. At the same time, the second factor is that the competition in this field is increasing. Other corporates like Grasim, JSW Steel, JK cement are entering the paint business. However, the outlook for the industry is still good despite the near-term challenges. He has expressed confidence on Asian Paints and Berger paints and said that these stocks can outperform. He says that the risk-reward ratio has improved further due to the current fall in these stocks.
These shares can earn
Brokerage house CLSA says that there has been a significant rally in crude. At the same time, gas prices in Europe are making continuous highs. Due to the cost of crude and gas, the shares of companies like GAIL, Oil India, ONGC are expected to rise. Although brokerage house Macquarie has rated outperform in Asian Paints, the brokerage believes that sharp rise in crude may affect the margins of Paints stock. But the company has the ability to come out of this pressure by increasing the prices. The brokerage has given investment advice in the stock with a target of Rs 3800.
(Disclaimer: Investment advice in stocks is given by experts and brokerage houses. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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