Oil Price Fluctuation and Stock Market Performance: Evidences from India
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The performance of stock market is largely depends on the performance of various macroeconomic factors and one such factor is oil prices. India is one of the largest importers of crude oil and as result of same large amount of foreign currency reserve goes into purchase of crude oil from international market. This puts pressure on the current account balance of Indian economy and the overall perception of investors in stock market. In this background, the present study is designed to assess the impact of oil price fluctuations on the performance of Indian stock market. The study considers the daily data of BSE Sensex and Oil prices (in US $) for period of 2009(FY) till 2017 (FY) as sample of the study. The long run association between the oil prices and index prices is assessed using Johansen co-integration test. The long causality between the crude oil prices and Indian stock market is assessed using Error Correction Mechanism while the short run causality is assessed using Wald test. The results of the study are indicating that the fluctuations in the oil prices cause the changes in the stock market of Indian economy.
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