IMPACT OF MACROECONOMIC INDICATORS ON THE STOCK MARKET OF PAKISTAN (KSE-100)

Abstract

This research study explores the impact of different macro-economic factors on stock prices of KSE-100 Index. To execute research study, data from last 10 years (2003 - 2013) was taken in consideration. This research study was totally based on secondary data. Different statistical tests like Pearson correlation and Regression analysis were used to analyze and interpret data. Economic model was created in which 04 variables were takes as independent and 01 variables was dependent. Independent variables were interest rate, inflation rate, exchange rate and GDP while dependent variable was stock prices of KSE-100 Index. Data was collected from website of State Bank of Pakistan. Correlation among these variables and overall significance & goodness of fit was analyzed. It was analyzed that all the independent variables had some affect on KSE-100 Index positively or negatively. Interest rate, Exchange rate and GDP had weak negative impact of KSE-100 index while Inflation rate had moderate positive affect.