IMPACT OF CHANGES IN OIL PRICES AND EXCHANGE RATE ON STOCK MARKET PERFORMANCE (EMPIRICAL EVIDENCE FROM PAKISTAN STOCK EXCHANGE)

Abstract

Performance of stock market in relation to change in oil prices and exchange rate has been examined and historical data ofseven years quarterly from 2014 to first quarter of 2022 has been collected from SBP, OGRA, PSO, DPS PSX and United Kingdom exchange rates website. This research has been organized to compute the relationship of macroeconomic factors oil prices and exchange rates on performance of stock market through descriptive statistics, bivariate correlation and regression analysis as stock market provides the platform for individuals to gain profit on their income through investment, enables firms and organizations to share and mitigate their risks and establish their businesses and also helps the state in earning tax revenue, therefore understanding the relationship between oil prices, exchange rate and stock market, factors impacting the progress ofstock market in an economy and how these factors affects the decision making of investors and attitude of market is essential. The results display that there is a positive autocorrelation between variables. Prediction regarding stock returns can be estimated by investors by understanding the factors affecting it performance and can enhance the knowledge of stakeholders making equity market more active and emerging.