Economic Crisis Impact Assessment and Risk Exposure Evaluation of Selected Energy Sector Companies from Bombay Stock Exchange

Abstract

The energy sector is one of the most important sectors as it is the producer and supplier of fuel to run other industries and economies. This research aims to present an intertwined structure of risk exposure measuring the performance of the S&P Bombay Stock Exchange (BSE) Energy Index and selected companies from the constituents while taking into account two scenarios of risk, namely the COVID-19 pandemic and the Russia–Ukraine conflict, in a manner appropriate for energy stock investors, energy companies, and the economy through hedging against investment risk, diversification in operations securing the continuation of energy production, and the risk of fluctuating prices in the energy market, respectively. The research problem is observed as the requirement to choose the representative stocks of the S&P (BSE) Energy Index to evaluate their situations during the period of the two crisis scenarios and to provide the current risk exposure to India’s energy sector. The methodological approach was through the process of selecting the stock market, the reason behind selecting the energy sector, analyzing the crisis situation, and finally providing the risk exposure matrix. The COVID-19 pandemic affected the index and stocks only in the beginning when the market was scared psychologically. The Russia–Ukraine conflict is considered to measure the stock status showing the effect on the index and the effect on selected stocks showing a deviated performance. All ten companies representative of the S&P BSE Energy Index ranked in the increasing order of risk exposure comparatively and concludes a high potential growth and return.