Impact of Oil Price Fluctuations on the Power Sector Stock Returns: Evidence from Pakistan

Abstract

This research has aimed to examine the impact of oil price fluctuations on the sectoral stock returns in Pakistan's power sector. Methodology: The quantitative secondary approach has been used for data collection and the data has been compiled from January 3rd, 201 i to April 26th, 2021 on daily basis. The stock market return data has been gathered for:-n Pakistan Stock Exchange (PSX) database while oil prices data have been compiled from if·~ online database of West Texas Intermediate (U.S. Energy Information Adm:·iii ·=h~.ti on , 2r12. i ). The data analysis has been performed using pooled OLS analysis technique. Findings: The current su: ·. l-w.s eft!: ~~~-..~ly examined the oil prices on stock market returns (SMRs) and vice-versa as · . .:"! 1. At fill ~- otl prices have a negative and significant effect on SMRs. Also, SMRs have s r. ,r;signi fi cant effect on oil prices which entails that an increase in the oil prices can affect the sr....1 Rs. Policy Implications: Secondly, the study provides notable managerial implications for investors and policymakers, which they can make the best use of to assess better complications faced SMRs because of fluctuation in oil prices. As suggested by the study, the information collected from oil prices can be used by policymaker best to describe possible alterations of SMRs in developing countries.