A Study on Impact of Crude Oil Price Fluctuations on NIFTY Auto Index Returns in India

Authors:

Akanksha Rani Bhagat, Dr. Tushar Ranjan Sahoo

Abstract: This research investigates the influence of crude oil price volatility on NIFTY Auto Index returns in India, utilizing monthly data from January 2021 to December 2024. The automotive sector's acute sensitivity to fuel costs underscores the importance of delineating its association with crude oil prices for investors and policymakers. Employing a quantitative methodology, the analysis incorporates descriptive statistics, correlation coefficients, and simple linear regression. Volatility is assessed via standard deviation of returns, while the linkage between oil price variations and sectoral returns is scrutinized through regression frameworks. Empirical findings demonstrate that crude oil prices display elevated volatility relative to NIFTY Auto returns. Nevertheless, regression outcomes reveal no statistically significant effect of oil price fluctuations on NIFTY Auto returns. The markedly low coefficient of determination indicates that oil price changes account for virtually no variance in automotive sector performance. These results suggest that NIFTY Auto Index dynamics are driven by factors extraneous to crude oil prices, including broader market conditions, regulatory shifts, and technological advancements. The study concludes that oil prices do not represent a primary determinant of automotive sector returns in the post-2020 period.

Keywords: Crude Oil Prices, Oil Price Volatility, NIFTY Auto Index, Stock Market Returns, Regression Analysis