Share Market Amid Iran-Israel Attack: IOC, ONGC, IndiGo, Asian Paint, Pidilite Among Stocks Under Pressure

Share Market Amid Iran Israel Conflict: The ongoing geopolitical tensions between Iran and Israel have sparked renewed volatility in global stock markets. With fears of supply disruptions in the strategically important Middle East region, crude prices have surged, impacting a broad swath of Indian industries. This has direct implications for companies in sectors such as oil refining and marketing, aviation, paints, and chemicals, many of which are listed on the Indian stock exchanges. Here is a breakdown of how their stocks and earnings could be affected if elevated crude prices persist.

Iran-Israel conflict: PSU Oil and Gas Stocks; IOC, BPCL and HPCL Share

Public-sector oil marketing companies like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) are particularly vulnerable in the current environment. These companies refine crude oil and sell petroleum products to end consumers. However, due to government-mandated price controls on fuel, OMCs often cannot pass on the full impact of rising input costs to consumers, especially for auto fuels like petrol and diesel.

"If crude oil prices remain elevated due to the Iran-Israel conflict, refining and distribution costs will rise, potentially resulting in under-recoveries. This would directly squeeze their EBITDA margins and impact quarterly earnings, triggering bearish sentiment in the stock market. Historically, such geopolitical price spikes have led to 5-10% declines in OMC stock prices in the short term, and any indication of prolonged conflict could amplify this downside," according to the market expert James Vosch.

ONGC and Oil India Shares May See Mixed Impact

For upstream oil producers like Oil and Natural Gas Corporation (ONGC) and Oil India, higher crude prices can theoretically boost revenues, as their selling prices are benchmarked to international crude rates. A sustained rally could lead to better realisation per barrel and improve their top-line performance.

Iran Israel Tension Affects Aviation Stocks: IndiGo, SpiceJet Shares in Focus

Airlines are another major casualty of spiking crude prices. Aviation turbine fuel (ATF), which is directly derived from crude, constitutes over 30-40% of an airline's operating expenses. Companies like IndiGo (InterGlobe Aviation), SpiceJet, and Air India will see a sharp rise in fuel costs if crude prices remain elevated for an extended period.

Paint Companies' Stocks: Margin Squeeze Likely for Asian Paints and Berger Stocks

Paint manufacturers such as Asian Paints, Berger Paints, and Kansai Nerolac source around 50% of their raw materials from crude-based derivatives like resins and solvents. These input costs are highly sensitive to crude fluctuations.

A sharp or sustained increase in crude prices will result in higher raw material costs, potentially compressing gross margins. While these companies might consider passing on some of the cost to consumers via price hikes, doing so could hurt demand growth, especially in the mid-tier and rural segments.

The last time crude breached $100/bbl, paint companies saw margin contraction of 100-150 basis points, and their stocks underperformed the Nifty 50 by 8-12% over a three-month period.

Chemical and Petrochemical Companies: Mid and Small Cap Stocks, Pidilite Industries, SRF, Aarti Industries, and Deepak Nitrite in Focus

Crude oil derivatives such as naphtha, ethane, and propane are critical feedstocks for the chemical and specialty chemical industries. Companies like Pidilite Industries, SRF, Aarti Industries, and Deepak Nitrite are exposed to global raw material prices, which are already tight due to prior supply chain disruptions.

With crude prices rising again, these firms will face higher input costs, which could erode operating margins unless passed on. While exports provide some buffer for larger players, domestic-focused firms may struggle with pricing discipline and demand headwinds.

Share Market Outlook Amid Israel-Iran Attack: Strait of Hormuz's Role; Volatility Ahead Across Multiple Sectors

The Iran-Israel conflict has reintroduced significant volatility in the oil markets, and if tensions escalate or result in actual supply disruption from the Strait of Hormuz, a key chokepoint for global oil shipments, crude could test new highs.

Disclaimer

The information provided above is for informational purposes only and is not promotional content. It does not constitute financial advice and should not be considered a recommendation for any investment or spending decisions. Neither the author nor Greynium Information Technologies shall be held liable for any losses incurred as a result of decisions based on this write-up.