Impact of oil prices and exchange rates on major sectoral indices in India

Crude oil consumption is growing with the pace of the economy in India. More than 80% of India's crude oil requirements is met from imports, and millions of Dollars are paid out for purchasing this inevitable resource. It is logical to assume that the sectors, which will be most affected by oil...

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Bibliographic Details
Published in:OPEC energy review 2020-06, Vol.44 (2), p.140-161
Main Authors: Muhammad Ashiq, AM, Shanmugasundaram, G.
Format: Article
Language:English
Subjects:
Context
Crude oil
Crude oil prices
Foreign exchange rates
Imports
Indexes
Oil
Petroleum
Petroleum industry
Prices
Pricing
Purchasing
Stock exchanges
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Summary:Crude oil consumption is growing with the pace of the economy in India. More than 80% of India's crude oil requirements is met from imports, and millions of Dollars are paid out for purchasing this inevitable resource. It is logical to assume that the sectors, which will be most affected by oil price changes, would belong to the oil‐related industrial sectors. In this context, this study is attempted to see how the oil price and exchange rate impact different sectoral indices in India using the ARDL model for the period from 1999 to 2018. From the empirical findings, we can summarise that dynamics in the exchange rate market have affected the stock prices of various sectors more than the crude oil prices in the Indian context. The reason for the oil price not showing a significant impact on any of the sectoral indices could be the significantly higher and lower crude oil prices that have prevailed within the study period, which could have offset this impact.
ISSN:1753-0229
1753-0237
DOI:10.1111/opec.12177