Abstract:
Purpose: To analyze empirically an impact of macroeconomic indicators on stock market
performance in Pakistan because the stock market is considered one of the key barometers of
economic activities in an economy.
Methodology/Design/Sampling: The nature of this research is quantitative and time series
data is used for studying the impact ofPakistan’s stock market and its determinants including
FDI, GDP growth, money supply and exchange rate. This research has been conducted using
secondary data which is gathered on annually basis from 2000 to 2018. Ordinary Least Squares
(OLS) is applied using E-Views (version 10) to evaluate the impact of independent variables
on dependent variable.
Findings: The analysis and results suggest a negative and insignificant impact of exchange
rate on stock market performance in Pakistan. On the other hand, there is positive and
significant impact of
FDI and GDP on stock market performance. However, money supply has
negative and significant impact on stock market performance.
Practical Implications: The outcomes of this study will help researchers while considering
the impact of macroeconomic variables on performance of stock market. This will also help
investors to take precautionary steps and analyze these variables before they invest in the
market. It will also works as guidance to government policy formulators by creating a better
understanding of the impact of macroeconomic indicators on performance of stock market in
Pakistan.
