Changing Dynamics of the Indian Stock Market in Response to Crude Oil Price Shocks Arising from Geopolitical Conflicts and U.S. Sanctions

This study analyzes the impact of crude oil price shocks on the Indian stock market (NIFTY 50), focusing on both short-run and long-run relationships and the influence of geopolitical events. Using time series data and econometric techniques such as ADF, cointegration, Granger causality, regression, and volatility tests, the study finds a weak but statistically significant positive relationship between oil and stock returns, with no long-run equilibrium or strong predictive causality. Volatility clustering is observed, and structural break analysis shows that major global crises, including COVID-19 and the Russia–Ukraine conflict, significantly affect market dynamics, while isolated geopolitical events have limited impact. Overall, crude oil prices influence the Indian stock market primarily in the short run, offering important insights for investors and policymakers.