THE IMPACT OF INFLATION, GDP, UNEMPLOYEMENT AND MONEY SUPPLY ON STOCK PRICES IN PAKISTAN

Abstract

Purpose: The aim of this research study is to analyze the impact of macroeconomic indicators on the stock market 100 index of Pakistan. In this research thesis the impact of selected individual macroeconomic variables is analyzed on the stock market of the firm. This study helps to analyze the nature and strength of the relation between the macroeconomic indicators and its ultimate impact on the stock market 100 index. Research Methodology: This research study is secondary in nature. In this research published data is used to conduct the analysis. In this research study explanatory research approach is used. In this research approach the impact of the independent variables i.e. GDP, unemployment, inflation rate and money supply is analyzed on the stock market prices that is the dependent variable of the study. In this research study the official website are visited and published resource are used the data on the selected variables that includes inflation rate, GDP, unemployment and money supply. In this research study multivariate linear regression statistical technique is used to analyze the impact of individual independent variables i.e. inflation rate, GDP, unemployment and money supply on the dependent variable i.e. stock prices. Findings of the Research: The results of the study reveals that there is a significant impact of inflation, money supply and unemployment rate on the stock prices while there is no significant impact of GDP growth rate on the stock prices. Practical Implications: This study reveals that there is significant role of inflation, money supply and unemployment in designing policy structure to support the development of stock market and industrial sector of economy and its resultant impact on economy.