Oil and gas shares rose on Tuesday, 19 May, following indications of reduced tensions between the US and Iran, which lifted optimism for stability in global crude supply and a decrease in oil prices.
Investor confidence particularly strengthened for downstream oil marketing firms, as falling crude prices are expected to lower raw material costs and boost refining and marketing margins.
Shares of Indian Oil Corporation, Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL), Gujarat Gas, Indraprastha Gas, Adani Total Gas rose nearly 4% amidst hopes of better profitability should crude prices keep declining.
Oil prices declined after US President Donald Trump said he had called off a planned military strike on Iran following appeals from key Persian Gulf allies.
Brent crude slipped below $110 per barrel after rising 2.6% in the previous session, while US benchmark West Texas Intermediate (WTI) crude for July delivery traded below $103 a barrel.
In a social media post, Trump said leaders from Saudi Arabia, Qatar and the United Arab Emirates had urged him to "hold off" on the planned strike against Iran, which was reportedly scheduled for Tuesday, as "serious negotiations are now taking place."
Crude oil prices have risen sharply in recent days amid concerns that rising tensions and the near-complete shutdown of the Strait of Hormuz could significantly disrupt energy supplies from the Persian Gulf.
Nevertheless, uncertainty continues to be high, as Trump has made previous threats of military intervention against Iran without taking further action, and Tehran has not yet officially announced the restart of talks.
Technical Views
According to Anshul Jain, Head of Research at Lakshmishree, oil marketing companies (OMCs) are beginning to present attractive long-term bottom-fishing opportunities after correcting more than 30% from their all-time highs. He noted that the sector is showing early signs of base formation, with price action stabilising following a prolonged downtrend.
Jain said recent fuel price hikes have improved investor sentiment and supported the sector by easing downside pressure. Among the major OMCs, he highlighted Hindustan Petroleum Corporation as the strongest player in terms of relative price resilience and recovery structure compared to peers.
He added that the stock appears to be witnessing early accumulation, making it his preferred pick within the sector. Sustained strength above recent swing highs, according to Jain, could potentially trigger a broader rerating across oil marketing stocks.
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