Oil Price Volatility and its Impact on The Selected Economic Indicators in India

Crude oil is one of the most necessitated worldwide required commodities. Any slight fluctuation in crude oil prices can have both direct and indirect influence on the economy of the countries. The unpredictability of crude oil prices forced many companies away from the competition and it influence the stock market and many other macroeconomic variables (inflation, GDP, Import bill etc). Crude oil prices act like any other commodity price i.e. based on demand and supply mechanism. Studies have conducted to observe the impression of increase in crude oil prices to the economic growth in the OPEC (Organization of Petroleum Exporting Countries) countries. Any slight fluctuation in crude oil prices has its impact on the condition of stock markets in India and throughout the world. The stock exchanges of all the countries keep watch on any movement of crude oil price. The present study is aimed to measure the relationship between crude oil price and selected macroeconomic variable i.e. stock market (NSE) and Inflation. The study also analysed the relationship between selected economic indicators and crude oil price. The period 6 years from 2007-08 to 2012-13 was taken for the analysis. The study found that there is significant positive relationship between crude oil price and Inflation India on the other hand Stock market of India (NSE) also affected by the changes in the crude oil price. The study has given evidences of other countries also to support the finding.