Nifty Oil & Gas index jumps 1% as crude oil tumbles following Israel-Iran ceasefire: BPCL, HPCL, IOCL shares gain 4%

Stock Market Today: The Nifty Oil & Gas index gained more than 1% during the morning trades on Tuesday as crude oil tumbled following the news flow on the Israel-Iran ceasefire. BPCL, HPCL, and IOCL share prices led the gains as these stocks gained 4%.

Brent crude oil price movement

The Brent crude oil that had been rising and inching closer to $75 a barrel following the Israel-Iran war, however, cooled down post news flow around the Israel-Iran ceasefire. The Brent crude price declined to sub-$70 a barrel levels.

The crude oil prices are likely to remain soft. "Crude oil is having support at $65.70-65.00, and resistance is at $68.60-70.20 in today’s session,' as per Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

The decline in crude price brought a sigh of relief to the Indian stock market, as the rising crude hurts the Indian economy and puts pressure on the rupee too, with India being dependent on imports to meet most of its crude requirement.

BPCL, HPCL, IOCL—Oil Marketing Companies share prices see a relief rally

The Bharat Petroleum Corporation Ltd., or BPCL, Hindustan Petroleum Corporation Ltd., or HPCL, and the Indian Oil Corporation Ltd., or IOCL, share prices saw sharp gains. The rising crude prices add to concerns about the marketing margins the oil marketing companies earn, and hence a decline in crude prices is positive for their earnings outlook. Marketing margins are the margins the oil marketing companies, such as BPCL, HPCL, and IOCL, earn by selling fuel at the retail outlets. If the cost of crude oil rises and retail prices remain unchanged, the OMCs see compression in their marketing margins.

The higher international crude prices also mean that OMCs see a rise in their working capital requirements as they need to spend more on the import of crude oil. This again is negative, and hence the decline in crude prices is helping prop up sentiments.

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