The Impact Of Macroeconomic Variables On Stock Market — Empirical Evidence On Karachi Stock Exchange By Using ARDL Model

Abstract

This research work provides a broader area to examine the impact of macroeconomic variables on Karachi Stock Exchange. KSE-100 index data is the dependent variable while macroeconomic variables are independent variable. CPI, foreign exchange rate, foreign portfolio liabilities (equities), oil prices and t-bill rates are selected as macroeconomic variables. Data is collected quarterly from the period of 1992 to 2009. A powerful ARDL model is used in this research work. Result of the ARDL model shows that CPI, exchange rate, and t-bill rates got negative relationship with KSE-100 index. Foreign portfolio liabilities (equities) and oil prices showed positive relationship with KSE-100 index