The Impact of Macro-economic Factors on Equity Market Return of Pakistan Stock Exchange (PSE)

The study examines the impact of macroeconomic variables such as Interest Rate (IR), inflation, Exchange Rate (ER) and Foreign Direct Investment (FDI) over Pakistan Stock Exchange (PSE) returns. Mainly secondary data used in the research process. The study consists of data for the period of 12years started from 2006 till 2018. For this purpose, monthly data of PSE-100 index has been observed for the period 2006 to 2018. The market returns have been calculated through the opening and closing index value of each month. The FDI, inflation, IR, and ER has been taken as independent variables. Hypotheses have been tested to find out whether there exists a significant relationship between the Stock market return and macroeconomic variables or not. To test this hypothesis, Regression analysis used and results are calculated through Eviews software.