The Study of Relationship between FDI and Stock Market and the Real Estate Sector

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Niharika Mehta, Dr. Seshanwita Das


The diversity and complexity of Property Market, its linkages with economy and investment sphere has necessitated a closer study on its dynamics and movement. This paper attempts to find out the role of real estate in a multi-asset portfolio and need of its securitization in order to be investible in Indian context. Johansen cointegration test and Granger's Causality Test in the VAR block exogeneity on Quarterly data (Q 2009-10 to Q3 2016-2017) for HPI (Real estate index) and NSE 50(Stock market index) shows that there is no long run as well as no short run relationship between these markets. Segmentation exists between the stock market and the real estate market, and so these two assets can be held in a portfolio for diversification purpose. Descriptive statistics prove it as desirable asset class for investment. It further proves that Direct real estate investment is sufficient to be defined as an asset class and does not require standardization through securitization in order to be investible. Findings are relevant for policymakers as well as for market traders. This study contributes to the alternative investment literature for emerging markets.

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