Oil → India stocks

Common explanation (Knock-on · opposite direction): India is a net oil importer, so rising oil prices squeeze its economy and its currency.

This issue: Oil at 72 (warm), India stocks at 34 (cool) — Oil above normal, India stocks below normal, in line with the common explanation (this is an inverse link).

Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.

Where it stands now

Where the two indicators stand this issue

Oil: 62.8% above its 10-year average. India stocks: 38.2% above its 10-year average, but by less than it usually is.

Tests

Does this link hold up?

Common explanationIndia is a net oil importer, so rising oil prices squeeze its economy and its currencySource: Reserve Bank of India, “The Impact of Crude Price Shock on India’s Current Account Deficit, Inflation and Fiscal Deficit” (2019). It covers how oil prices raise India’s current account deficit, inflation and fiscal deficit, not the rupee or the stock market directly.
Tested against our dataAgreement between the positions of Oil and India stocks (3-month lag), measured in the direction of the common explanation: +0.19 (an opposite-direction link: the raw correlation is −0.19, and a negative correlation fits, so the sign is flipped). Looking at every 5-year period (shifted one year at a time), the two moved in that direction in 17 of 42. Weak or inconsistent
Periods when it did not holdAcross 42 5-year periods, out of step in 1980⁠–⁠1985, 1986⁠–⁠1993 and 1994⁠–⁠2024.

History

The two lines, overlaid

Data: World Bank Pink Sheet (CC BY 4.0); OECD Main Economic Indicators (share prices). Positions: our calculation.

OilIndia stocks

Limits

What this card cannot tell you

Moving together does not prove that one causes the other.
Links change over time; periods when this one did not hold are listed in full.
This is the historical record, not a forecast.

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