Shares of paint companies — Asian Paints, Berger Paints, Kansai Nerolac, Akzo Nobel and Indigo Paints — extended gains on Wednesday, a day after global oil benchmark touched a six-month low mark, as a larger-than-expected drop in US oil and gasoline stocks reminded investors that demand remains firm, if overshadowed by the prospect of a global recession.
Shares of Kansai Nerolac Paints, rose 3.1 percent, and touched an intraday high of Rs 515 on Wednesday. Berger Paints stock jumped 1.3 percent, Asian Paints was 1.2 percent up, and Akzo Nobel and Indigo Paints were up 1.2 percent and 1.8 percent, respectively.
At 10:00 am, shares of Asian Paints and Indigo Paints were trading almost a percent higher while Akzo Nobel was almost half a percent up. Berger Paints was trading 1.1 percent higher. The stock of Kansai Nerolac Paints was 1.8 percent up.
Oil rebounded from its six months low on Wednesday but stayed under the $100 a barrel mark. Brent crude futures jumped 3.9 percent to $95.95 a barrel and West Texas Intermediate (WTI) futures were 0.83 percent up at $87.25 a barrel.
Paint is manufactured using a significant amount of petroleum-based raw materials. The price of crude oil is proportionally related to the cost of paint manufacturing, and the price of paint has an inverse relationship with margins. The higher the crude oil prices, the higher the manufacturing costs, and lesser the margins.
