A Synopsis on

“A study of the impact of crude oil prices on Indian stock market”

Synopsis submitted to the Bangalore University in partial fulfillment of the

Requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

BANGALORE UNIVERSITY

SUBMITTED BY

Praful Goudar
Register No.: 18CQCMD094
III SEMESTER MBA

UNDER THE GUIDANCE OF

PROF. V. S. HARSHITH BABU

Assistant Professor
GUIDE REG. NO: 18CQFG005

DAYANANDA SAGAR COLLEGE OF ARTS, SCIENCE & COMMERCE

SHAVIGE MALLESHWARA HILLS, K.S. LAYOUT, LAYOUT, BANGALORE – 560078

Academic Year- 2017-2019
 1. TITLE

A study of the impact of crude oil prices on Indian stock market.

2. INTRODUCTION

Crude Oil price is one of the most significant macroeconomic variables which affect the
cost of production directly or indirectly thus, affecting the future cash
flows and profits of companies. Recent years especially after Gulf War
(1990-91) and Iraq War (2003) had resulted sharp swings in oil prices,
with oil price reaching as high as $148/bbl., followed by an equal dramatic
fall in prices. Price increase will decrease the demand which in turn need
fewer dollars for oil import. Trade deficit will also be lowered down leading
to lesser pressure on rupee-dollar rate. Not only petrol price but the price
of diesel and kerosene will also be increased to have more prominent
impact. This will improve the fiscal deficit of the government and lead
economic growth. As oil prices increases cost of production and in turn
affecting the required expected rate of return from the business. Since,
current stock price of a company reflects the discounted future cash flows
from the business, as specified by the Dividend Discount Model for Stock
Valuation (Value of Stock = Dividend per share/ (Discount Rate-Dividend
Growth Rate)). Relationship between changes in crude oil prices (Brent
Crude) and its impact on Indian Stock Market (i.e. BSE Sensex) The overall
impact of rising oil prices on stock prices depends of course on whether a
company is a consumer or producer of oil and oil related products. Since
there are more companies in the world that consume oil than produce oil,
the overall impact of rising oil prices on stock markets is expected to be
negative.

3. STATEMENT OF THE PROBLEM

 Higher crude oil price will adversely impact the twin adverse for economic activity and
financial markets. And a large mismatch of supply and demand with shortage of production
and to reduce the two burden that vary according to the government polices imposing taxes
of fuels and recover losses and maintaining marginal profits from oil business in India.

4. NEED FOR THE STUDY

If rising oil prices lead to higher inflation expectations over the longer term, rising
energy and wage costs are more likely to be passed through in terms of rising consumer
prices. Increase in oil prices can depress the supply of other goods because they increase the
costs of producing them.

5. SCOPE OF THE STUDY

Scope of this study is to propose and understanding the cost variations tax burdens. Profit and
loss recoveries of crude oil that are impacting on Indian economical growth and financial
markets. This study would have significant implications for the stock market.

6. OBJECTIVE

1. To study the fluctuations in Crude Oil price (Brent Crude) in the last ten years (2009-18).
2. To evaluate the impact of Crude Oil price on Indian Stock market.

7. RESEARCH METHODOLOGY

The study was empirical in nature and the total population consisted of all the global Oil
Markets and various stock exchanges functioning today. Out of which only Brent Crude is
selected as reference for oil price and the study is limited to Indian stock market represented by
BSE SENSEX.
  Plan of analysis

CHAPTERS NO OF DAYS FOR SIGNATURE

ANALYSIS
Introduction and literature 10 days
of survey
Research design and Profile 10 days
of respondents
Data analysis, findings, 10 days
suggestions and conclusion.

 CHAPTER SCHEME
Chapter 1- Introduction
Chapter 2- Research design
Chapter 3- Profile of respondents
Chapter 4- Data analysis and Interpretation
Chapter 5- Findings, suggestion and conclusion.

Praful Goudar Prof. V S Harshith Babu

(USN no:18CQCMD094) (Guide Reg.no: 18CQFG005)

Signature of Student Signature of Guide