Impact of Demonetisation on Selected Stocks of Real Estate Sector

International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue IX, September 2018 | ISSN 2321–2705

Impact of Demonetisation on Selected Stocks of Real Estate Sector

Smitha V Shenoy1*, Akshay Nayak2

1Assistant Professor – MBA, BMS College of Engineering, Bangalore, Karnataka, India
2Thomson Reuters, Bangalore, Karnataka, India
*Corresponding Author

Abstract: – Real Estate sector is one of the most sensitive sectors of an economy that reflects the economic policy changes. The tax reforms, demonetization, interest rate cuts or volatility in stock markets, all have affected the real estate sector. Both the common man or upper class of this country are affected by changes in real estate sector, as they are parking centre for excess funds for all.
This study is an empirical research of the impact of Demonetization on the stocks of Indian Real estate sector. The Objectives of the study were (1) To analyse selected Reality sector stock returns pre and post demonetisation and (2) To analyse Reality Index Returns pre and post demonetisation. 6 of the top real estate companies of 2017 were considered for the study. The selected companies were DLF, Oberoi Realty, Prestige Estates, Godrej Properties, HDIL and Sobha. The share prices of Companies were taken from BSE Website. The period from October 2015 to November 2016, was considered as pre demonetisation period. The period from October 2016 to November 2017 was considered as post demonetisation period.
Out of the 6 companies analysed, the stock prices of 5 companies have increased after Demonetisation. This implies that demonetisation had a positive impact on reality sector stocks. The Reality Index returns have increased in one year period after demonetisation, compared to a one year period before demonetisation.
The involvement of black money and cash transaction in real estate sector was considerable. The passing of RERA (Real Estate Regulation and Development Act 2016), the Benami Transactions Act and now the demonetization will ensure that going forward will become more transparent and will definitely lose its historic taint. These regulations would also prevent investors from getting cheated and buy properties of their choice at affordable prices, the place where they want to and the timely possession will also be assured.

Key Words: Real estate, Investment, Demonetization, stocks returns

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