This study examines the relationship between oil prices and stock returns in Pakistan using secondary data and regression analysis. It analyzes four companies - Attock Petroleum, Pakistan State Oil, Lucky Cement, and Attock Cement - from two sectors, oil and gas and construction materials. The hypothesis is that oil prices have a positive relationship with stock returns. Regression results show a negative relationship, with higher oil prices linked to lower stock returns. In conclusion, increases in oil prices raise costs for businesses. The study recommends that firms monitor supply and demand forces influencing oil prices and properly use hedging techniques.

1. Group Members
• MARYAM KHAN
13029046-002
MBF

2. AFFECT OF OIL PRICES
ON STOCK RETURN

3. Abstract
• This study will examine the relationship
between oil prices and stock return rate in
Pakistan.
• In order to find the relationship we will use
secondary data.
• To get the results regression analysis will be
used.

4. INTRODUCTION
STOCK RETURN
OIL PRICES

5. IMPACT
Rising oil prices on stock prices depends of course
on whether company is a consumer or producer of
oil Increases in oil demand without offsetting
increases in supply lead to higher oil prices.
Higher oil prices act like an inflation tax on
consumers and producers by reducing the amount
of disposable income consumers have left to spend
on other goods and services.

6. OBJECTIVE
The study investigates the interrelation and
dependency of stock returns on oil prices in
Pakistan. This paper is an effort to evaluate the
relationship of oil price movements and stock
returns in a booming market of Pakistan.

7. PROBLEM STATEMENT
The subject identified is stock price and the
other variaable is weather conditions. We have
chosen the two sector.

8. LITERATURE REVIEW
He concluded that market is sensitive to oil price
changes. There is a positive impact on stock
market return. The intensity of market’s reaction
also depends on the level of oil prices
(Gogineni, Sridhaar;, 2008)

9. SECTORS
OIL AND
GAS
SECTOR
ATTOCK
PETROLEUM
PAKISTAN
STATE OIL
CONSTRUCTION
AND MATERIAL
SECTOR
LUCKY
CEMENT
ATTOCK
CEMENT

10. VARIABLES
DEPENDENT
STOCK
RETURN
INDEPENDENT
OIL
PRICES

11. HYPOTHESIS
‘‘Oil prices have a positive relation with
the stock return’’

12. POPULATION:
The population size for the study has been the companies
listed on ww.kse.com.pk under the industry sectors of oil
and gas, and construction and materials sector.
SAMPLE SIZE:
Attock Petroleum and Pakistan State Oil have been
studied under Oil and Gas Sector.
Lucky cement and Attock cement have taken
under construction and materials sector.

13. DATA TYPE & ANALYSIS
Data collected from 2013-2015 of first six
months by using the 2nd, 15th or 30th of each
month.
(KSE and Investing Commodity Prices)
Descriptive Statistics
Histogram
Regression
Correlation

15. ATTOCK PETROLEUM

16. RESULTS
SR (APL) = 0.42364+ (-0.0037) EC + e
• If all other things remain constant i.e. there is
no influence of other variables on stock
return rate then stock return will have a
value of 0.42364 percent
• About slope: a 1 unit change in oil prices will
affect stock return by - 0.0037 percent.

17. Cont.…
• PSO PETROLEUM
SR (PSO) = 0.128+ (-0.001) EC + e
• LUCKY CEMENT
SR (LUCK) = 0.2575+ (-0.002) EC + e
• ATTOCK CEMENT
SR (ACL) = 0.679+ (-0.006) EC + e

18. CONCLUSION
• By applying the tools, we have concluded
that oil prices has a positive relation with the
stock return.
• A firm should be able to switch production
processes to compensate for added fuel
costs.
• Increase in oil prices will raise cost for
business to spend more money on it.

19. RECOMMENDATION
• Supply and demand forces are the
determinants of oil prices, a firm should
monitor.
• Use of hedging techniques properly.

20. Thank You