India's lower crude oil output hits paint stocks but ONGC, Oil India gain

Shares of oil and gas companies like Oil India Limited and Oil and Natural Gas Corporation (ONGC) rose while Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) declined on Wednesday on investors' mixed reactions to India's lower crude oil production in July.

The country's crude oil production fell around 3.6 percent in July on lower output from fields operated by state-owned ONGC and private sector firms, according to the government data released on Tuesday, The production fell to 2.45 million tonnes last month from 2.54 million tonnes in the year ago period.

The recorded output was lower than the monthly target of 2.59 million tonnes.

ONGC produced 1.7 percent less oil at 1.63 million tonnes on lower output from western offshore. Fields operated by private firms saw a 12.34 percent decline in production.

On global level, crude oil prices fell on Wednesday on easing fears of output cut by Organization of the Petroleum Exporting Countries and Allies (OPEC). The Brent crude futures slumped 0.5 percent to $99.7 a barrel and West Texas Intermediate (WTI) futures were 0.4 percent down at $93.4 a barrel.

Juerg Kiener, MD & CIO, Swiss Asia Capital told CNBC-TV18, “Oil prices are swaying depending where you are in the world, depending on what your infrastructure and logistics right now is. So we have got very big dislocation."

Kiener said there are people who get oil at significant discount, $80 per bbl and there are some people who pay significantly more due to logistic issues. "So the spread is actually quite big and therefore the futures markets not representing what happens on the ground."

The sectoral index BSE Oil and Gas rose over a percent. It was trading 0.2 percent up at 19,705.5 on BSE at 11:18 am.

Shares of paint companies — Asian Paints, Berger Paints, Kansai Nerolac, AkzoNobel — extended losses, however, Indigo Paints remained in the green after the data showed the cut in oil output.