Testing the random walk and market efficiency in Pakistan stock market

Abstract

The respective study focuses on the successful current market theory which is usually broadly recognized by simply academics community like a foundation regarding current financial hypothesis. The study provides an in depth meaning of the hypothesis in addition states that effective current market is usually a current market in which stock price ranges swiftly change in addition to readily available in addition to recently unveiled facts, wherever majority of individuals are generally realistic in their decision doing practice in addition to wherever a trader struggles to outperform the market as a result of just about any looks at, on account of real selling price regarding Karachi stock Exchange indicating it's built-in benefits. The aim of this study was to find the efficiency level, also the testing of random behaviour of Stock prices in KSE 100 index of Pakistan Stock Exchange. Study found that data is following random pattern hence predictability is not possible. Study also illustrated that there is week form of market efficiency prevailing in the market, it means that market is volatile and chances of arbitrage are also there. Study has used 5 years data i.e. stock prices of KSE 100 index.