• Muhammad Sadam Bin Tayyab
• Tahir Anees

This study provides an analysis of whether stock market in hedge against inflation or not. As there were very few studies conducted on this area in Pakistan in recent time so this study will help the investors and other stakeholder to get a better understanding about the market whether they are investing their money in the right basket or doing wrong decision by putting their capital into the market where time value of money matters a lot. Whether stock market hedge against inflation in Pakistan. The study applied few analyses for better understanding and interpretation of the results which includes descriptive statistics, the Augmented Dickey Fuller (ADF) Unit Root test in which we used Durben Watson Stat and LM test for auto correlation of the variables and Granger-causality test. We used E-Views 10 statistical package for data analysis. Results of the analysis interpret that in Pakistan we have found negative relationship between Inflation and Stock Returns. The overall results of the study oppose the Fisher Hypothesis that suggested the stocks give the fence against the Inflation and the connection among the stocks and the expansion is positive. So it could be expect that there is a noteworthy connection among stocks and the Inflation and furthermore the negative connection among Inflation and return. Therefore the higher inflation is related to the lower expected future returns. Few of the reason of this relation are decline in value of money, deficit in budget, energy crises, increment in tax and interest rate as Government policy plays an important role in fluctuation of both of these variables.

Stock Market, Inflation, Correlation, Cointigration

"Inflation’s Impact on Stock Return", International Journal of Emerging Technologies and Innovative Research (www.jetir.org), ISSN:2349-5162, Vol.6, Issue 3, page no.627-634, March-2019, Available :http://www.jetir.org/papers/JETIR1903784.pdf

"Inflation’s Impact on Stock Return", International Journal of Emerging Technologies and Innovative Research (www.jetir.org | UGC and issn Approved), ISSN:2349-5162, Vol.6, Issue 3, page no. pp627-634, March-2019, Available at : http://www.jetir.org/papers/JETIR1903784.pdf