Does green stock immune to policy uncertainties? Examining impacts on Indian economy amid US monetary, climate, oil and energy uncertainties

Purpose Recent global catastrophic events, such as the Russia–Ukraine War and the COVID-19 pandemic, have led to several policy uncertainties in the global economy. Due to increasing financialization, these policy uncertainties have had a ripple effect on the global financial system, urging investors to search for alternative safe-haven financial instruments. To understand how these uncertainties influence Indian green financial markets, the present study seeks to explore the impact of US monetary policy uncertainty, energy policy uncertainty, oil price uncertainty and climate policy uncertainty on the Indian BSE Green and BSE Carbon indexes. Design/methodology/approach In order to achieve the stated objective, this study employs the autoregressive distributed lag model alongside the Bayer and Hanck cointegration tests and the Granger causality test, leveraging monthly data spanning from December 2012 to April 2024. Findings Empirical evidence states that there exists a strong cointegration between the explanatory and outcome variables, and US monetary policy uncertainty, energy policy uncertainty, oil price uncertainty and climate policy uncertainty exert a positive and significant influence on the Indian BSE Green and BSE Carbon index. Furthermore, the Granger causality test confirms a unidirectional relationship between US monetary policy uncertainty, energy policy uncertainty, oil price uncertainty and the Indian BSE Green and BSE Carbon indexes, as well as a bidirectional relationship between the Indian BSE Green and BSE Carbon indexes and climate policy uncertainty. Practical implications This study offer practical implications by suggesting that investors can use Indian green index as a hedge and safe haven against the aforementioned uncertainties. Investors should consider these dynamics while constructing an optimum portfolio to avoid losses caused by rising uncertainties. Originality/value The study unveils a unique relationship between green indices and various uncertainties, a topic not previously explored in the literature. It provides valuable policy recommendations aimed at elucidating the implications of green markets for sustainable development and the formulation of risk mitigation strategies.