Does Macroeconomic Variables Effect Stock Market Price Positively

Abstract

Decision about investments are highly affected by the variables of macroeconomics as changes in macroeconomically variables influence the stock markets performance individually accordingly to economic conditions of the state and their policies of government. This research investigates impact of macroeconomics variables inflation, economic growth, interest rate, unemployment, and exchange rate on stock market performance in Pakistan. There are multiple macroeconomic variables but five are taken into the consideration for measuring their influence on performance of the stock market. The purpose of present research is investigate the possible impact of these five variables of macroeconomic such as inflation, economic growth, interest rate, unemployment, and exchange rate on performance of Pakistan stock market. Moreover COVID-19 has been taken into consideration where no research related to this topic till now has been done. Stock market and macroeconomic variables have a close relationship. The examination adds to set up the influence of five macroeconomic factors on stock execution of Pakistan and investigation the yearly information from June 2001 - June 2020. Regression model is applicable to review short and long term co-integration of chosen macroeconomic variables on the performance of stocks. The outcome suggest that performance of stocks of Karachi Stock Exchange are significantly influenced by, Inflation, exchange rate, and interest rate. In short term all these variables result no significance except inflation that is negatively correlated with stock performance.