Contents

Abstract: ........................................................................................................................................................ 4
CHAPTER 1 .................................................................................................................................................... 5
1.1 Introduction: ....................................................................................................................................... 5
1.1.1 Introduction to Karachi stock exchange: ..................................................................................... 8
1.2 Research Aim: ..................................................................................................................................... 8
1.3 Research Objectives: ........................................................................................................................... 9
1.4 Nature of the Research: ...................................................................................................................... 9
1.5 Scope of the research ......................................................................................................................... 9
1.6 Limitation of the research ................................................................................................................... 9
CHAPTER 2 .................................................................................................................................................. 10
2.1 Literature Review: ............................................................................................................................. 10
Chapter 3..................................................................................................................................................... 17
3.1. Introduction to Methodology: ......................................................................................................... 17
3.2 Research Hypothesis: ........................................................................................................................ 17
3.3 Sample Design and Data Collection .................................................................................................. 17
3.3.1 Population: ................................................................................................................................. 17
3.3.2 Sample Size: ............................................................................................................................... 18
3.3.3 Variables:.................................................................................................................................... 18
3.4 Data Collection and Analysis: ............................................................................................................ 18
3.5 Theoretical Framework: .................................................................................................................... 20
3.6 Data Analysis Techniques:................................................................................................................. 21
3.6.1 Results and Findings................................................................................................................... 21
3.7 Discussion: ........................................................................................................................................ 24
Chapter 4..................................................................................................................................................... 25
4.1 Conclusion: ........................................................................................................................................ 25
4.2 Recommendation:............................................................................................................................. 25
4.2.1 for future researchers: ............................................................................................................... 25
4.2.2 For investors............................................................................................................................... 26
CHAPTER 5 .................................................................................................................................................. 26
5.1. References: ...................................................................................................................................... 26
 Abstract:

The concept of efficient market hypothesis is an interesting discussion for the researcher

of finance and economist. But with passage of time it gained more importance when the

volatility of stock markets increases because in such uncertain environment the information is

very important to make decision. The different financial crisis in past were the result of such

uncertainty in market. And this uncertainty is higher in countries like Pakistan and the efficiency

of markets are more erratic. The present study focuses on analyzing the efficiency of the capital

markets of Pakistan through Efficient Market Hypothesis. Centre of this study is KSE-100 index.

For this purpose the data is collected from KSE official website and open doors. By applying

linear regression technique the outcome shows that weak form efficiency exist in the KSE.
CHAPTER 1

1.1 Introduction:
Nowadays there are instability in capital markets thats why the concept of efficient

market hypothesis becomes hot topic for discussion. Like Ali & Akbar (2009), Chakraborty

(2006) and Husain (1999) conducted research on weak form efficiency on Pakistani market.

The concept of efficient market hypothesis is very popular among the stock market of the

world. First lets explain that what the EMH is. The market which fully reflect all information

about financial asset prices and returns Or The actual price of a security or stock good estimate

of the intrinsic value or when there is no arbitrage opportunity exist in the market for

investment or earning. One cannot beat the market in the presence of EMH and an investor will

bear maximum transaction cost by applying active strategy in the presence of this. EMH was

developed by Eugene Fama (1965) by arguing that investors are always will informed about

stocks prices thats why it is not possible for them to buy or sell under or overvalued stocks

because maximum profit is earned by the investors in case when the stocks are mispriced. On the

availability of information efficient market hypothesis are divided into three categories.

1: Weak form Efficient Market Hypothesis

2: Semi-strong form Efficient market hypothesis

3: Strong form Efficient Market Hypothesis

Above three markets given are define as

1: WFEMH (Weak form efficient market hypothesis)

In weak form efficient market hypothesis investors cannot earn maximum profit in

trading of puts and calls on the basis of using fast information about the stocks.

2: S-SFEMH (Semi -strong form efficient market hypothesis):

In semi strong form efficient market hypothesis stock price reflects some economic

essentials, including the public market data as well as the content of financial reports, economic

forecasts, company announcements, and so on are publically available. On the basis of such

available information investors cannot predict returns.

The dissimilarity between the weak and semi strong forms is that it is almost charge less

to monitor public market data, whereas a high level of basic analysis is necessary if prices are to

fully reflect all publicly available information, such as public accounting data, public

information regarding competition, and industry-specific knowledge.

3: SFEMH (Strong form efficient market hypothesis)

In strong form efficient market hypothesis all the public and private information about

the stock prices is available.

But the main reason is that the case of strong form efficient market hypothesis is an ideal

situation which means it doesnt exist in real world. There are some markets in which such a

situation exists like fruit and vegetables market but it is for limited time period because mostly in

such markets there is arbitrage opportunities existed. Investors bear more transaction cost when

they adopting an active strategy just because they are switching from one security to another one.
In case of EMH no one can earn abnormal profit either he is individual or institutionalized

investors. Above it is given that it is an ideal situation and no one can beat the market. Warren

Buffett the most triumphant modern-day investor beat the market for longer period of time.

Most investors, both institutional and individual, will find that the best way to own common

stocks (shares) through an index fund that charges minimal fees. Those following this path are

sure to beat the net results (after fees and expenses) of the great majority of investment

professionals.

There are two types of analysis on the basis of which the efficiency of the three types of markets

are differentiate that which type of market is more profitable in case of which type of analysis.

Technical analysis

Fundamental analysis

By using technical analysis WFEMH is not profitable for investors.

Semi-strong form excludes the profitability in cooperation of technical and fundamental

analysis.

And strong form implies that even those with confidential information cannot wait for to

earn surplus returns.

Here the main topic of discussion is WFEMH.

Level of efficiency is different for individual and aggregate stocks as it is said by

Samuelson. It is concluded that weak form efficiency existed in the UK market. But this was
rejected by some of the researchers such as Firth (1976, 1979, and 1980) concluded that semi-

strong efficiency exists in the UK market.

EMH are closely linked with different models, theories and anomalies. Due to these models and

theories different markets have different form of efficiency, some markets show weak form

efficiency while other have semi-strong form efficiency.

On the basis of liquidity market is attractive for more investment. Ownership of the stock or

shares play very important role in stock markets because in most of the countries there are family

owned businesses like Pakistan and Taiwan etc so there stock markets are more stirred by such

factor. Indirect ownership concentration in the stock market is more as compared to direct and

mutual fund investment (Claessens, 2001).

Main purpose of this study is to find out the efficiency in KSE by using eight years data.

1.1.1 Introduction to Karachi stock exchange:

Karachi stock exchange is one of the oldest, largest and liquid exchanges of Pakistan. On the

basis of market capitalization KSE is the oldest stock exchange in south Asia. Its index is 3rd best

performer in the world since from 2009. Karachi Stock Exchange also scheduled amongst 10 top

stock markets in the world in 2015.

1.2 Research Aim:

Aim of the study is to find out the nature of the Karachi stock exchange that whether

weak form efficiency exists in it.

1.3 Research Objectives:

The main objective is to find out the relationship of current stock price with the previous

stock prices that whether the performance of current stock prices is based upon the previous one.

1.4 Nature of the Research:

This study is quantative in nature.

1.5 Scope of the research

Most researchers did their work on this topic both in developed and developing countries.

Same is true for Karachi stock exchange. But the main point is that when study is carried out on

KSE at that time market are in boom conditions. Preview is that to analyze it by using the time

period of crises.

1.6 Limitation of the research

Sample used for this study is very small.

Shortage of time

Only one independent variable is used

CHAPTER 2

2.1 Literature Review:

Several studies has documented on the efficient market hypothesis (Gilani, Nawaz,

Shakoor, and Asab, (2015), Nguyen, Chang, and Nguyen, (2012), and Kumar, and Kamaiah,

(2014)). It is already known that EMH has three forms. Here the topic of discussion is WFEMH.

A number of research has reported their existence while some are not in there favour. The

researchers who are not in the favor of weak form efficient market hypothesis are (Rabbani, S.,

Kamal, & Salim, 2013, Arshad Haroon, 2012 and Gilani, Nawaz, Shakoor, & Asab2015).

In case of efficiency major of the studies IS carried out on Karachi stock exchange.

Different researchers worked on the weak form efficient market hypothesis so according to

Rabbani, Kamal, and Salim, (2013) findings that inefficiency exists in Pakistani market during

specific time period but along with this weak form efficiency also existed in Pakistani market

also. Although both the cases occurs but does not existed at same time period. Study conducted

by Rabbani et al. (2013) it is said that in Pakistani markets the prices can be predicted through

the past available data, so it means that markets in Pakistan are inefficient.

Sometimes the question arises that is the stock prices are predictable or not. Due to price

predictability or instability more investors are attracted toward stock markets and invest their

money and thus they can carry out the transaction of buying and selling. According to Purmonen

and Griffin (2015) the basic strategy is that we should put all our money in stock on the first

day and should take out all our money from stock on the last day of the prediction period, this
strategy is called Buy-and-Hold strategy and to measure the performance of prediction he used

different tests like MAPE.

According to Hameed and Ashraf( 2006) that mostly the risk of investor increased due

to maximum instability in stock prices. According to Smith, and Dyakova, (2014)

predictability depends on some factors like size, liquidity and market quality and similarly he

said that small markets are more predictable. In one of the study conducted by Khawja and Mian

(2005) it is said that brokers used the instability of prices to increase the cost of involvement by

investor.

Ups and down movement occurs in prices of stock and this movement is caused by multiple

factors. Different researchers identified different factors in their studies. And these factors mostly

affect the markets in less developed countries like Pakistan, these factors include Political, social,

rumors, and the flow of private and public information ( Bashir, Ilyas, and Farrukh, 2011).

According to the study conducted by Rabbani et al. (2013), they identified some other factors

which can affect the market are slow communication and information process, due to brokers,

monopoly in markets and outflow of information. There are multiple macroeconomic factors

like inflation rates, money supply, real economic activities and interest rates have relation with

stock prices (Pearce and Roley 1985). Public news has great impact on stock prices. According

to Chan (2003) there is maximum change in monthly returns of stocks after good or bad news.

Bernard and Thomas (1990) and Ou and Penman (1989) identified that stock prices respond

quickly to accounting changes. Mostly investor decrease investments in stocks of companies

or firms which charge high premium. This affect of corporate finance events was proved by the

Jenson and Warner (1988), Desai and Jain (1999) and Chemmanur and Yan (2004) in their

research.
 The concept of random walk theory or hypothesis is also of great interest that whether

prices follow random walk behavior or not. On the basis of RWH researchers identified the

efficiency of the stock markets. Random Walk Theory propose that in weak form efficiency it

is not possible to earn abnormal profit from past price information because information spread so

quickly in market (Poshakwale 1996; Gupta and Basu 2007).

EM can help the companies in many ways for example through EMH firm cannot only produce

funds but it also helps in placing current funds in a profitable way(Rabbani et al. 2013).

Random walk model can be apply to some emerging markets where as it cannot be apply to

some emerging markets like Pakistani stock exchange markets ( Hussain 1997) .

To check the efficiency of markets is very important for an economy whether it is

performing well or not. Major research is conducted on the efficiency of the stock markets of

different economies. According to Fama [1970] that there is continuum in market efficiency

when the investor bear less transaction cost in stock market then market is considered

information efficient.

In different studies KSE is compared with the stock exchanges of other countries. Results

show that maximum stock markets of different countries show that weak form efficiency existed

in their markets. But in case of Pakistan there is confusion regarding the existence of weak form

of efficient market like Haque, Liu, and Fakhar- Un Nisa (2011) are not in the favor of

existence where Rashid and Hussain (2012) argued that WFEMH existed in Pakistan. While

Haque (2013) by applying different types of tests to check out the behavior of KSE 100 weekly

price index and his results shows rejection of random walk in KSE and conclude the existence of

weak form efficiency.

 Rehman, Sania,Qamar, Muhammad Rizwan (2014) applied both parametric and non

parametric test to check the weak form efficiency of KSE because the previous studies didnt

consider the weak form efficiency of KSE and also did not applied both test at the same time.

The previous studies either applied parametric or non-parametric but this study applied

both test at the same time and concluded that WFEMH does not grab in Pakistani market.

Due to the post event the stock prices of companies are mostly affected. Mostly

companies performing well before their initial public offering. When these companies launch

their shares in market their stock prices are very high because of their performances and after

sometimes their stock prices becoming low the reason of that lower stock price the information

about their weakness is spread in the market (Fama, 1998).

One logical justification is that small stocks provide real info about the problems of bad

Model. It is because small stocks do not fit the pricing model so we use the bad model problems

to test the market efficiency.

As the flow of info in EMH is quick so it avoids the opportunity of arbitrage profit for investors

the only way through which the investors can gain profit is mispricing the stocks. But this

mispricing is adjusted through Samuelsons fair game theory or martingale difference

(Samuelson, 1965).

According to DeBondt and Thaler (1985) market efficiency does not existed and was

replaced by behavioral alternative of such overreaction.

Efficiency have relation with time, it is clear from previous studies that efficiency varies

with the passage of time (Asal, 2000; Angelov, 2009; Borges, 2011), but they also said that these

changes occur in a specific point of time. To measure this change of efficiency with time
different models have been used like ARCH in mean (GARCH-M) in mean models (Emerson

et al., 1997, Zalewska-Mitura and Hall, 1999; Jefferis and Smith, 2005; Abdmoulah, 2010).

To test weak form of efficient market hypothesis different researchers used different

methods like Smith, G., & Dyakova, A. (2014) used Rolling Window variance Ratio test to

analyze it because it helps to follow the changes occurring weak efficiency and also help in

leveling the stock markets to their relative predictability.

Study conducted by Rabbani et al. (2013) it is said that in Pakistani markets the prices

can be predicted through the past available data, so it means that markets in Pakistan are

inefficient.

Just like conventional organization most of the research is also carried out on Islamic

finance organization that weather the concept of EMH exist in such organizations or not. As the

literature has indicated that there are three types of EMH so one of the study is carried out on

WFEMH that weather it exist or not in Islamic financial organization. Jawadi, Jawadi, and

Cheffou, (2015) conducted the research on three major regions (emerging countries, developed

countries and the World) by applying four different types of tests and their findings gives the

result that in short and in long term the Islamic stock market appears very less efficient, and with

the same objective it advocate higher investment opportunities and diversification which in turn

payback in both long and short horizons. There are many factors on the basis of which such

inefficiency exist like shariah restriction, less liquidity, large proportion of informed traders in

markets, and lack of diversification etc. Short horizon is attractive for both the developed and

world Islamic market by providing attractive opportunities for investment.

 The main cause of inefficiency in underdeveloped countries or economies is the

lack of rivalry between investors and thus in reality the communication between the participants

was not fully mechanized (Nwachukwu, . , & Shitta, 2015).

Now the question arise is that what is the performance of the stock markets in a newly

established economies? Are they performing well or not? Maximum research is carried out to

answer these questions. One of the studies concludes that during at the emerging stage the Asian

markets perform well (Nisar et al 2015). Most of the researchers used different types of data on

the basis of which there outcome is different like some used daily basis data while others used

monthly data.

During in emerging era the south Asian market surpasses well (Nisar et al 2012). Pakistan, India

and Bangladesh come in South Asian market. In this research monthly data is used and also

concluded that market is not efficient in case of using daily data.

Despite the fact that there are abundant of literature are founded on the weak form efficient

market hypothesis but there are hardly few articles in which the association of industrialized and

emerging stock exchanges stock prices were determined. In emerging markets the weak form

efficiency was first observed by (Barnes, 1986; Chan Chan, Gup, and Pan, M.S., 1992;

Dickinson and Muragu, 1994; Ho and Cheung, 1994)

To check the weak form efficiency in Forex or emerging markets like according to

Kumar, and Kamaiah, (2014) by using NEER data of eight European emerging markets in order

to check weak form efficiency they uses different types of test like individual and joint ratio test

and there results indicate that in some emerging markets WFEMH exist for shorter time while

other markets are information inefficient.

When Russian stock markets were check for the efficiency by Said, and Harper, (2015) they

conclude that weak form efficiency does not exist in these markets and a person can earn

abnormal profits by using historical data or information.

Many researchers identified different factors like January effect, small-firm effect,

excessive market volatility, market overreaction, new information and mean reversion and these

factors have abrupt effect on the EMH but some author are not in the favor of this like (Nguyen,

Chang, and Nguyen2012).On the basis of such factor researchers drive their conclusion.

Most of the researchers are in favor of weak form efficiency because they think that it

gives a long term benefit to the stock market and such type of the markets are very attractive for

the investors. This was said by Mishra(2012) when he carried out his research on Asian stock

markets include four stock exchanges KSE,BSE,DSE and maturities and his study concluded that

these markets were not in efficient form.

Anomalies play very important role in market efficiency. Some anomalies are long term

while others are short term and difficulty comes by classifying long term anomalies and it can be

disappear by using different alternative approaches. Some of the major anomalies that were

identified by the researchers are January anomaly, earning reports, price to earnings ratio, Price-

Earnings/Growth (PEG) Ratio, size effect and neglected firms.

Some of the researchers give the conclusion about the unreliability of the anomalies

which clearly explains that it have no such major effects in concept of EMH.

CAPM models are sometimes considered as bad models because most of the times it is

considered that it doesnt give clear results about the expected return of the stocks. According to

Fama, (1997) that small stocks always create hurdles in the asset pricing model and so the main

and sure source of bad models are small stocks. Fama, (1997) that when some of the changes
can take place during measuring these long term anomalies they are so weak that can be easily

broken.

Chapter 3

3.1. Introduction to Methodology:

The aim of this study is to find out the existence of WFEMH in Pakistani markets. For this

purpose the panel data is used and as it is to finding out the relationship of present returns with

that of fast or historical data so regression model is used. This study is similar to the study of

Nguyen, Chang and Nguyen, (2012) but the basic difference is that of the time frame and

geographic location. They carried out their study on Taiwan stock exchange and here the area of

interest is Pakistani market and specially the KSE.

3.2 Research Hypothesis:

Ho: there is no existence of weak form efficiency in Pakistani markets

Hi: there is existence of weak form efficiency in Pakistani markets

3.3 Sample Design and Data Collection

3.3.1 Population:
The data has been taken from KSE. Total number of companies listed on the KSE is 576

and organized in 36 sectors. Some are financial and some are non-financial firms. The number of

non-financial firms listed on KSE in 2004 to 2005 was 443 but due to not fulfilling the criteria or
rules and regulation of Karachi stock exchange 79 companies are removed from it. Now the

number of non-financial firms is 364 and the remaining are financial firms listed on KSE.

3.3.2 Sample Size:

Sample size contain of 100 companies listed on KSE from period January 1st 2007 to

December 30th 2014. Judgmental sampling technique is used in this research.

3.3.3 Variables:

There are two variables used in this study one is dependent variables and that another one is

independent variable. Stock return t-1 is independent variable and stock returns T is dependent

variable.

3.4 Data Collection and Analysis:

For carrying out this study secondary data is used. This data consist of closing price along

with their dates. By finding out there returns depended and independed variables are selected.

Data is taken from Karachi stock exchange, google scholars, ksestocks and open doors.

Requirements of data are as follows;

Each companys closing price

Each companys particular data

Each company is listed on KSE

As data taken for this research is of eight years of 100 companies listed on the Karachi

stock exchange. In each year five months are randomly selected. These companies are

selected from every sector.

Y it and Yi, t-1 as the prices of stock i at time t and t-1 are the previous stock prices and posited

the existence of regression model as follows

Yit i iYi,t-1 it (A)

Above equation (A) explains that number of individual stock is represented by N where i = 1, 2,

3N and I is the number of observation so t = 1, 2, 3,N.i andiare intercept and

slope constant. While the is the Gaussian error which at the same period show a contemporary

correlation between the stocks.

As it is hypothesis based so the hypothesis for it are as follows

a iandi

Dockery and Kavussanos (1996) argued that mostly non stationary behavior existed in stock

prices so to get rid of such inferences problems using stock returns are better option.

For finding out stock returns the following formula are used

Sit =LN (Yit/Yit-1) (B)

Where equation A represents

Sit= actual returns of company i stock at any given day t

Yit= current closing price of the stock at a given day t

Yit-1= previous closing price of the stock at a given day t

LN= denotes natural logarithm

 By using stock returns the new equation becomes

r it = i + it (C)

It is propound that WFEMH becomes

Ha: i

3.5 Theoretical Framework:

ST: Shows the returns of the

Dependent Variable
stock at current time period.

S, t-1: Shows the returns of

the stock prices at previous Independent Variable
time period.

Above theoretical framework is based upon efficient market hypothesis give by Eugene

Fama in 1965. This theory explains that all the information of the firm value is reflected by the

stock prices of that particular firm. Random walk theory is another term used for the EMH. So

no investor whether individual or institutionalized can earn ceiling proceeds in the presence of

EMH.EMH have three forms;

 Weak form EMH

Strong form EMH

Semi-strong form EMH

For finding out the existence of weak form efficiency in Taiwan stock the same

variables was also used by (Nguyen, Chang, & Nguyen 2012)

The existence of weak form efficiency has been found by (Nguyen, Chang, & Nguyen
2012) by using the same form or category of variables.

3.6 Data Analysis Techniques:

3.6.1 Results and Findings
Table1.1:

Descriptive Statistics

Mean Std. Deviation N

ST -1.32034866E-5 .137934666 65351

ST1 -1.32034866E-5 .137934666 65351

Descriptive Statistics:

Here table 1.1 is for descriptive statistics which shows values of mean and standard

deviation of variables. From the above table 1.1 it can be seen that the total number of

observation is 65351.

ST is depended variable having average value -1.320(observation 65351) of 100

companies listed on the Karachi stock exchange. The standard deviation for the same
 observations is 0.1379 which clearly give an idea about that how much these returns of the

stocks are away from the mean.

The mean point of independent variable ST1 is -1.329 of observation 65351 of selected

(100) companies listed on the KSE for period 2007 to 2014 and for the same data the standard

deviation is 0.1379 which is equal to the value of the dependent variables and expresses more

deviation from there mean result.

Table 1.2:

Model Summary

Change Statistics
Std. Error of the
Model R R Square Adjusted R Square Estimate R Square Change F Change df1 df2 Sig. F Change

.052a .003 .003 .137746089 .003 180.053 1 65349 .000

a. Predictors: (Constant), ST1

Model Summary:

Here table 1.2 is for model summary which shows values of adjusted R square and

change statics.

Mostly adjusted R square is used for by finding out that about how much the model for a

particular data is strong or not. Here the value of adjusted R square is not too good which means

the model is not in strong or in good position. The value of R square is 0.003 which clearly
 demonstrate that Independent variable brings only 3% change in dependent variables. So the

error factor is more in this data set.

The value of f is 180 which are greater than 3. So it means that the model is fit.

Change in value of sig.F is 0.000 which is less than 0.05 and this shows that the model is

significant.

Table 1.3:
Coefficientsa

Standardized
Unstandardized Coefficients Coefficients Collinearity Statistics

Model B Std. Error Beta t Sig. Tolerance VIF

1 (Constant) -1.390E-5 .001 -.026 .979

ST1 -.052 .004 -.052 -13.418 .000 1.000 1.000

a. Dependent Variable: ST

Coefficients:

Here table 1.3 is for coefficients which show the values of sig and VIF of variables.

When the sig value is less than or equal to 0.05 this shows that the result is significant. Here

when the linear regression test is applied for this the value of sig comes is 0.000 which indicates

is less than 0.05 so the result is good and it shows that weak form efficient market hypothesis

exist in KSE from January 2007 to December 2014.

When there is correlation among the independent variables the excellent result cannot

come clearly because for getting good result you will further repeat the same process again with

little changes in particular data set. There are some categories on the basis of which it is
identified that co linearity exist or not. VIF explain the co linearity concept. When the value of

variance inflation factor is equal to 1 it explains that there is no co linearity exist. The value of

VIF in the table is 1 which shows that there is no co linearity in the independent variables.

3.7 Discussion:

The above table clearly show significance result which means that weak form efficiency

exist in Karachi stock exchange. But the value of adjusted R square is less which means that

more Gaussian error is involved in the data set. As the error term is too much which is up to

97%. There are some factors like 2008 crises, firm size, price to earnings ratio, insider

information, seasonal offering etc on the basis of which this error occur.

Previous studies 123 conducted in developed countries where market conditions are more

stable thats why weak form efficient market hypothesis does not exist in such developed

markets. But developing countries like Pakistan have an instable market that is why according to

this study weak form efficient market hypothesis exist in Pakistan (Karachi stock exchange).
Chapter 4
4.1 Conclusion:

This study is carried out to check the weak form efficiency in Karachi stock exchange.

Rationale of this study is to finding out the existence of weak form efficient market hypothesis in

KSE. Closing prices of KSE-100 index are used from January 1st 2007 to December 31st 2014.

To get the entire result simple linear regression is used. And results of this model explains that

due to the economic and unstable conditions in Pakistani markets it is identified that weak form

efficient market hypothesis exist in Pakistani markets. So investors earn maximum profit by

predicting the performances of stock prices on the basis of their past performance.

4.2 Recommendation:
4.2.1 for future researchers:
1. They should need to take more companies in there sample size to get the entire result.

Because by increasing the sample the chance of uncertainty is less.

2. In this study only one independent variable is taken so for further research it should be

necessary to use more independent variables to get a very efficient result.

3. Use different types of techniques.

 4. However in previous research they there sample size is greater but there time frame is

less so to carry more clear result along with greater sample they should need to take more

time frame.

5. By using weekly or monthly data they may get different result.

4.2.2 for investors

It is recommended for the investor that they can earn maximum profit by investing in

Karachi stock exchange. Because weak form efficiency exists in KSE so they can predict the

performance of the stock on the basis of previous performance of stocks.

CHAPTER 5

5.1. References