Oil Prices Shock in Indian Stock and Oil Market

Mohit Pandey and Mohit Mayank
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Mohit Pandey: Department of Economics, Doon University, India.
Mohit Mayank: Department of Economics, Doon University, India.

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Abstract: India highly relies on the foreign crude oil supply, hence many listed firms in the National Stock Exchange trade accord the crude oil prices. In this study, we materialize Brent Oil prices impact on three important Sectoral Indices, stock prices of NIFTY along with NIFTY 500 Index. Each sector accommodates those stocks, which endure a close relationship with the crude oil prices. We followed the model developed by (Lutz Killian, Cheolbeom Park, 2009) for selecting the sectoral indices and variable in oil market components. VAR and FEVD model assist us in understanding what determines Indian Oil market prices and whether oil prices affect the NIFTY sectoral index stock prices. We construct growth model to assess study further and followed guideline and tests, which are essential for VAR analyses. It is observed that only energy sectoral index respond to oil shock and global oil production impact Indian oil demand and oil prices whereas domestically oil price are determine by oil reserves and oil supply in India. This study advocates for requirement of Indian oil reserves but does not provide any cost based analysis.

Date: 2019-06-03
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Published in Asian Journal of Economics, Finance and Management , 2019, 1 (1), pp.46-55

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05303041

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