Relationship between prices in commodity market and equity market: A case of steel industry

There has been a rapid expansion in the commodities market in the recent past due to the sharp rise in appetite of institutional investors or financial institutions for commodities for asset management purpose. Commodities markets are demonstrating an ever-increasing volatility due to structural shifts in supply and demand sides leading to wide price swings. The article attempts to examine the relationship between the steel price in commodity market and equity price of steel industries. The article also attempts to examine association between CNX metal index with spot market steel price, spot market commodity metal index and Nifty index. The method used is primarily regression analysis. It has been found that the variables individually are having comparatively lesser impact on CNXMIR but jointly they are explaining 73% of total variation.