The direct impact of the huge fall in the prices of crude oil in the international market was seen on the Indian stock market on Friday. The domestic market also benefited from the rise in the global market amid expectations of easing tensions in the Middle East. The biggest beneficiaries of this big news were those companies whose business largely depends on crude oil prices. In the early trading itself, a strong rise was recorded in the shares of airlines, oil marketing companies (OMC), tire and paint manufacturing companies. IndiGo shares rose by more than 3 percent in early trade, while HPCL and BPCL shares jumped by 3 to 4 percent.
As soon as the market opened, investors started buying all around. If we look at the data at 9.18 am, BSE's main index Sensex was trading at the level of 74,803.93 with a strong gain of 971 points (about 1.3 percent). On the other hand, Nifty of National Stock Exchange was also not left behind. Nifty made a spectacular jump of 276 points or 1.2 percent and reached the level of 23,437.65. The market trend appeared completely positive. This can be easily understood from the fact that while shares of 2,051 companies were trading in the green, only 307 shares saw a decline.
After the sharp fall in crude oil prices, investors immediately changed their investment strategy. They diverted their money towards sectors expected to benefit most from cheaper energy prices. Whenever crude oil prices come down, the costs of oil marketing companies as well as tire and paint manufacturing companies decrease. Due to cheap oil, their input cost gets reduced. Same thing happened in Friday's session also. Apart from oil marketing companies, shares of tire manufacturing companies made investors happy. Shares of tire sector witnessed a rise of up to 3 percent.
The biggest celebration of the fall in crude oil prices was seen in the aviation sector. InterGlobe Aviation, the parent company that operates IndiGo airline, was included in the list of top gainers in the market today. The company's shares gained more than 3 percent and reached the level of Rs 4,644. The economics behind this boom are very simple. The biggest expenditure of any airline company is on Aviation Turbine Fuel (ATF). When crude oil becomes cheaper internationally, the cost of aviation fuel also decreases. Reduction in costs directly means that the company's ability to earn profits will increase. In this hope, investors have placed their bets in aviation shares.
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Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
