“The need for oil-proofing the Indian economy – its financial and real sectors, from shocks or adverse geopolitical events cannot be overstated. This also points to the need for a policy for promoting energy security and sustainability…It would also be prudent on the part of regulators to be vigilant of the potential contagion from global crude oil price movements given their wider implications for systemic financial stability,” the report mentioned.

The working paper known as for speedy investments in different different power sources the place India might be self-sufficient.

Using a non-time various threshold, the paper tried to measure the contagion influence of maximum modifications in world crude oil costs on 10 composite sectoral indices of the Indian inventory markets. Simply put, the ‘contagion effect’ refers back to the attainable unfold of an financial disaster or growth throughout completely different areas.

“Of the two oil exceedances – positive and negative, the contagion effect of positive oil exceedances was not only dominating as indicated by the higher magnitude of the positive coefficients but was seen impacting all 10 sectoral stock indices compared with seven in the case of negative oil exceedances,” the paper mentioned. Exceedance is the act or truth of exceeding one thing, particularly a restrict or normal.

The findings point out that there could be different elements prompting the next and extra pervasive contagion on the sectoral shares within the Indian market – the living proof being the INR/USD market.

“Given India’s import dependence on crude oil and the observed co-exceedances, any negative stock may lead to a decline in market capitalisation and loss of wealth for investors,” the paper mentioned.

The paper titled ”Measuring Contagion Effects of Crude Oil Prices on Sectoral Stock Price Indices in India’ nevertheless examined the uneven side of the contagion impact on sectoral indices solely partially.

(With inputs from companies)