Impact of Macroeconomic Variables on Stock Returns of Automobile Assembler Sector in Pakistan

Abstract

The main objective of this study is to analyze the impact of macroeconomic variables on automobile stock returns in Pakistan stock exchange. In history of economic development stock market plays an important role. The economy is always affected by various macroeconomic variables which cause a lot of changes in functioning of financial market. For this study Five major macroeconomic variables are GDP growth rate, Inflation rate, exchange rate, political stability and absence of violence/Terrorism, and foreign direct investment, have been taken as independent variables, stock return of automobile industry are taken as dependent variable and market capitalization is used as control variable. Time series annual data for the period10 years from 2013 to 2023 has been taken for study. Panel regression technique is used to determine the impact of macroeconomic variables. The study reveals that selected macroeconomic variables have significant positive relationship with stock returns except inflation which has a negative relationship.