Crude oil futures to manage the price risk of textile equities: An empirical evidence from India-Reference-Cited by-同舟云学术

Crude oil futures to manage the price risk of textile equities: An empirical evidence from India

Published:2022-08-31 Issue:04 Volume:73 Page:438-446
ISSN:1222-5347
Container-title:Industria Textila
language:
Short-container-title:

Author:

KUMAR B. R. PRADEEP¹,KUMAR K. ABHAYA¹,PINTO PRAKASH²,HAWALDAR IQBAL THONSE³,SPULBAR CRISTI⁴,BIRAU RAMONA⁵,ANGHEL LUCIAN CLAUDIU⁶

Affiliation:

1. Department of MBA, Mangalore Institute of Technology and Engineering, Moodabidri, Karnataka, India

2. Department of Business Administration, St. Joseph Engineering College, Mangalore, Karnataka, India

3. Department of Accounting and Finance, College of Business Administration, Kingdom University, Bahrain

4. Faculty of Economics and Business Administration, University of Craiova, Romania

5. Doctoral School of Economic Sciences, University of Craiova, Romania

6. Faculty of Management within The National University of Political Studies and Public Administration, Bucharest, Romania

Abstract

The textile sector in India is the oldest manufacturing sector. As the raw materials for this sector are sourced from the petrochemical industries, the earnings of Indian textile companies are dependent on the crude oil price. The crude price in the international market has become more volatile and hence, the equity price of Indian textile companies has become more volatile. This study aims to develop two price risk management strategies for Indian textile equities. Using the vector autoregressive (VAR) model, a price forecast model, further the possibility of cross hedge for textile equities with the help of crude futures is examined using the Granger causality test and Pearson correlation statistics. The results of the study showed that crude futures price in India is one of the price determinants of textile industry stock prices.

Publisher

The National Research and Development Institute for Textiles and Leather

Subject

Polymers and Plastics,General Environmental Science,General Business, Management and Accounting,Materials Science (miscellaneous)

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