Oil Prices Shock in Indian Stock and Oil Market

Since India is so reliant on international crude oil supplies, several listed companies on the National Stock Exchange trade crude oil prices. The effect of Brent Oil prices on three relevant Sectoral Indices, stock prices of NIFTY, and the NIFTY 500 Index, is examined in this report. The stocks in each sector are those that have a similar relationship with crude oil prices. For selecting sectoral indices and variables in oil market components, we used the model developed by (Lutz Killian, Cheolbeom Park, 2009). The VAR and FEVD models help us understand what drives Indian oil market prices and whether oil prices influence stock prices in the NIFTY sectoral index.To evaluate the study further, we built a growth model and followed the guidelines and tests that are needed for VAR analyses. Only the energy sectoral index reacts to oil shocks, and global oil output has an effect on Indian oil demand and prices, while domestic oil prices are determined by India's oil reserves and supply. This study supports the need for Indian oil reserves, but it lacks a cost-benefit analysis.

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