Macroeconomic Variables & Its Impact on KSE-100 Index

Abstract

The study examines the relationships between the KSE-100 index and a set of macroeconomic variables over sampling period from (1992) to (2011) Statistical tools i.e. Multiple Regressions and Pearson's correlation models were used to study the relationship between stock prices (KSE-100index) and macroeconomic variables. The finding from the test shows (80%) variations in the dependent variable were explained by the independent variable. Therefore, the model was good fitted and there was a strong relationship between dependent and independent variables, variation in the stock prices explained up to (80%) by the variation in the independent variables. The results further suggested that exchange rate, inflation and GDP (Gross domestic product) growth rate were positively related with stock prices (KSE-100index). While negative impact found on the stock prices of KSE-100 index of the interest rate.