Aviation and oil firms'stocks slumped in trade today as crude oil prices rebounded after top exporter Saudi Arabia announced a supply cut in December and other producers considered reductions heading into 2019.
While the SpiceJet stock fell up to 4.12%, InterGlobe Aviation declined up to 4.43%. The Jet Airways stock too lost 6.54% on the BSE. Stocks of oil marketing companies too lost value as brent crude prices rose above $70 per barrel. While HPCL fell 5.57%, BPCL declined 1.58%. State-run Indian Oil Corp too lost 3.17% on BSE.
Brent crude prices were trading above $71 per barrel after falling to $70.18 last week , down 19 percent since October 3. The US standard, West Texas intermediate crude, was $60.19, down 21 percent in the same period.
Even with the slump, however, oil prices are still higher than they were a year ago.
Concern about oversupply has pushed oil prices down by roughly 20 percent since early October. The decline in prices continued last week after the US said it would let eight countries keep importing Iranian oil. That eased fears that new US sanctions on Iran would cause shortages and drive prices higher.
Saudi Arabia's energy minister Khalid al-Falih said on Sunday that the kingdom will reduce exports by around 500,000 barrels a day from November to December. Russian oil minister Alexander Novak said his country was open to cuts, at a meeting of oil producers in Abu Dhabi.
Every dollar per barrel change in crude oil prices impacts the import bill by Rs 823 crore ($0.13 billion). The same is also the impact when currency exchange rate fluctuates by Re 1 per US dollar.
Reacting to rising brent crude prices, the Indian currency fell below the $73 mark to 73.06 level compared to the previous close of 72.50 per dollar on Friday.
Forex traders said besides increased demand for the US currency from importers, the dollar's strength against some currencies overseas weighed on the rupee.
At the Interbank Foreign Exchange, the rupee opened lower at 72.74 and slipped further to quote at 73.04 against the dollar, down 54 paise over its previous close.
On Friday, the rupee rose by 50 paise to end at 72.50 per dollar on increased selling of the greenback by exporters amid softening crude oil prices, which slipped below the $70 per barrel mark.