Abstract:
Purpose:
The purpose of this study is to examine the relationship between macroeconomic variables and
stock market and the cause of volatility in the stock market. It is essential for the Stock Market to
be monitored by having proper examination of the determinants that put impact on the entire
performance of Stock Market.
Methodology:
The macroeconomic variables which have been taken in this study include exchange rate, inflation
rate, interest rate, gold prices and gross domestic product (GDP) whereas KSE 100 index and
aggregate market capitalization both variables are used as a proxy to represent the performance of
Stock Market of Pakistan. The data has been gathered from the website of Finance Ministry of
Pakistan under the head of Statistical Appendix and Economic Survey of Pakistan. The data has
been taken on annual basis and the data begins from the period starting from 2002 till 2016. The
Multiple Linear Regression has been run for the Data Analysis through SPSS.
Findings:
The result of the findings shows that exchange rate and GDP are statistically significant whereas
the result of inflation rate, interest rate and gold prices shows that they are statistically insignificant
in line with KSE 100 Index and Aggregate Market Capitalization. The study validates the findings
of earlier studies. Moreover the study has also discussed the conclusion, recommendation and the
suggestion for the future research in the end of the thesis.
