Published Online:January 2025
Product Name:The IUP Journal of Applied Finance
Product Type:Article
Product Code:IJAF050125
DOI:10.71329/IUPJAF/2025.31.1.141-152
Author Name:Arul Sulochana Yesudas
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:141-152
The study aims to determine how crude oil and gold prices affect the Indian stock market, using data on the prices of crude oil, gold, and the Nifty 50 index (Nifty) from 2014 to 2024, and applying descriptive statistics, stationarity tests, correlation coefficients, Granger causality tests, and multiple regression analysis. The findings reveal that crude oil prices may influence the Nifty index, while gold prices do not show a significant relationship. This study stands out due to its innovative method: combining Granger’s causality model with traditional regression analysis to identify both correlations and causal links between commodity prices and stock market performance. This dual approach offers a clearer understanding of how changes in gold and oil prices can predict stock market trends. By using recent historical data, the study provides highly relevant insights for today’s market. Investors looking to diversify their portfolios with gold, oil, and stocks will find this study particularly useful. Given the recent volatility in gold and oil prices, this study challenges the common belief that stock performance is unaffected by commodity price fluctuations, providing valuable insights into how these changes impact stock returns.
The performance of stock markets is complexly linked to various economic factors, with commodity prices, particularly gold and crude oil, standing out as significant influencers. Gold, traditionally viewed as a safe-haven asset, tends to attract investments during periods of economic instability, providing a hedge against market volatility.