The Nexus Between Brent Crude Oil Volatility and Indian Stock Market Returns: An Environment Management Perspective

Abstract

The main aim of the research paper is to study the impact of Brent crude oil price movements on the Indian stock market, with a focus on major Indian indices such as BSE SENSEX, NIFTY 50, NIFTY AUTO and key sector specific indices such as Automobile, FMCG, Energy, and Aviation sectors and its implication on environment and importance of renewable energy.  The data which is utilized for finding the effect of the Crude oil fluctuations on Indian Stock Market is secondary data which is obtained from NSE website. The time period taken for this analysis is 2016–2025 i.e. 10 years period. This secondary time-series data helps us in analysis part by applying various econometric techniques such as correlation analysis, regression modelling, unit root tests, Johansen cointegration, ARDL, VAR, Granger causality, and GARCH models to examine both short-run and long-run relationships. On performing further analysis using Johansson Cointegration Tests, it shows no evidence of long run cointegration between Brent Crude Oil prices and Indian stock indices. The volatility model shows that Crude oil price fluctuations contribute moderate risk to Indian Stock Market. The Company-level analysis demonstrates that most firms exhibit insignificant sensitivity to oil price movements. Some cases like Automobile company named Ashok Leyland shows a significant negative relationship. Overall, the study concludes that Brent crude oil influences the Indian stock market primarily in the short run, with limited magnitude when compared to broader macroeconomic variables.