On April 9, shares of Indian paint companies surged during the afternoon session, despite an overall muted sentiment in the broader market. The rally came as Brent crude oil prices dropped below $62 per barrel, marking a major decline in one of the most important input costs for the paint industry. The drop brought cheer to investors, especially those watching raw-material-heavy sectors like decorative paints.

Crude Oil's Impact on Paint Industry

The paint industry is highly dependent on crude oil and its derivatives. More than 300 raw materials, most of them petroleum-based, go into the manufacturing of paints. Raw material costs account for 55-60% of total input costs for paint companies. Thus, any movement in crude prices has a direct effect on gross margins and profitability.

Brent crude, the global oil benchmark, has fallen over 30% in the last year. Investment bank Morgan Stanley has revised its Brent estimates downward, predicting the price will stay in the $60s range during the second half of 2025. This bodes well for India, which imports around 85% of its crude oil needs, as well as for companies that heavily depend on crude-linked inputs.

Paint Stocks Respond Positively

At 12:40 PM IST, several key paint stocks showed notable gains:

• Asian Paints climbed 1.4% to trade at Rs 2,428

• Berger Paints rose 0.8% to Rs 540

• Kansai Nerolac was up 1.2% to Rs 247.23

These gains stood out even as Nifty 50 traded flat, reflecting a sector-specific tailwind that benefited paint players uniquely.

Why Lower Crude Prices Matter for Paint Players

Lower crude prices translate to cheaper raw materials, particularly for paints that rely on solvents, resins, and synthetic binders derived from petroleum. This could lead to:

• Better gross margins due to falling costs

• Stable or lower pricing for end consumers

• Improved competitive positioning in a price-sensitive market

If crude remains low over the coming months, paint companies may not only post stronger financials, but may also gain a larger market share by passing on the benefits to consumers in the form of lower product prices.

One-Year Performance Still Subdued

Despite the day’s optimism, long-term performance of paint stocks has been relatively muted:

• Asian Paints has declined 15% over the past year

• Berger Paints fell around 3%

• Kansai Nerolac shares are down 12%

In comparison, the Nifty 50 index has remained flat during the same period, underlining the underperformance of the paint sector amidst various macroeconomic headwinds, including earlier inflationary pressures on crude.

Crude Price Influence Extends Beyond Paints

Crude oil isn’t just a key input for paints—it is also a major component in synthetic rubber and petrochemical products, which are vital for tyre manufacturing. With oil prices falling, tyre companies may also experience:

• Reduced production costs

• Better profit margins

• Increased room for pricing flexibility

This broader impact reflects how interlinked crude oil is with multiple industries. However, the paint industry remains one of the most directly affected due to its raw-material-intensive nature.

Looking Ahead: Key Takeaways for Investors

The recent rally suggests that investors are closely tracking commodity-linked cost trends and sector-specific triggers. For the paint sector:

• Sustained lower crude oil prices could lead to earnings upgrades

• Price action may reverse a year-long underperformance trend

• Valuations could improve if profit margins expand in upcoming quarters

However, investors must also factor in currency movements, freight charges, and raw material inventory cycles, which can affect the final benefit realized by these companies.

Conclusion

The rally in paint stocks on April 9 underscores the importance of crude oil prices as a market mover. As Brent trades below $62 per barrel and Morgan Stanley projects a weak outlook for the remainder of the year, paint companies like Asian Paints, Berger Paints, and Kansai Nerolac are poised to benefit.

Investors and market watchers would do well to keep an eye on:

• Further movement in crude prices

• Q1FY26 earnings results of paint companies

• Global macroeconomic developments that may impact commodity demand and pricing

For now, the cooling of crude oil has painted a bright short-term picture for the paint industry in India.

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