CAUSAL NEXUS BETWEEN THE ANAMOLIES IN THE CRUDE OIL PRICE AND STOCK MARKET

Iqbal Thonse Hawaldar,Adel M Sarea,Lokesha Lokesha,T M Rajesha

doi:10.32479/ijeep.9036

Iqbal Thonse Hawaldar, Adel M Sarea + Show 2 more

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https://doi.org/10.32479/ijeep.9036

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Abstract

The paper attempts to examine the causal association between the crude oil price anomalies and stock market returns in the Indian stock market. The study covers nine years starting from 2009 to 2018, and the study includes ten companies in the oil drilling and exploration sectors listed in the BSE SENSEX and CNX NIFTY indexes. We employed correlation tests in determining the relationships amongst the stock market return, crude oil price and market benchmarking indexes. Our study concludes that the oil price shocks is not directly affecting the stock prices of oil-related firms; instead, its indirectly impacting the economy through different channels such as fiscal, trade and price channels. We also suggest the need for future researches in determining the effect of oil price variations on the macroeconomic factors by precisely diagnosing the role of channels mentioned above.

Highlights

The oil price anomalies in the last few years have created colossal attention from the research scholars in exploring the nexus amongst oil price and financial markets
Our analysis found that the Indian refinery stocks do not provide an unwavering and favourable return except one stock, as the stock returns sensitive to the vicissitudes in the crude oil price
Beta, which indicates the volatility in stock concerning market is found useful for only a few companies, i.e. some companies show a negative beta which portrays that the oil price variations do not impact the stocks

Summary

INTRODUCTION

The oil price anomalies in the last few years have created colossal attention from the research scholars in exploring the nexus amongst oil price and financial markets. Studies found that price anomalies of the crude oil influence the expected earnings thereby affects the stock return value (Jones and Kaul, 1996) It is one among the prime significant economic aspect directing the entire economy at the macro level. Indian stock market is one among the most traded capital market in the world (Iqbal and Mallikarjunappa, 2007; Iqbal and Mallikarjunappa, 2009) It is a growing market provided and equipped where securities transaction can be carried out after their initial offerings which involve the intermediation of brokers, registrars, trading organisation, investors, lead bankers etc. It facilitates the precise and smooth running of corporate sectors where there is a free economy.

LITERATURE REVIEW

RESEARCH METHODOLOGY

DATA ANALYSIS AND DISCUSSION

Findings

CONCLUSION