Oil Price Shock and Equity Market Response: Evidence from Indian Indices during Iran War

Abstract

The study examines the impact of Iran war–induced crude oil price shocks on the Indian stock market. Using time-series data and econometric techniques such as ADF, regression, GARCH, and event study analysis, the study evaluates the relationship between oil prices, stock returns, exchange rate, inflation, and capital flows. The findings reveal that rising crude oil prices negatively affect stock market performance and increase market volatility during periods of geopolitical uncertainty. The study highlights the vulnerability of the Indian economy to external oil shocks due to its heavy dependence on crude oil imports.