IMPACT OF MACROECONOMIC

FACTORS ON STOCK MARKET

RETURNS OF KSE 30 INDEX
Obaid Ur Rehman
Reg#MMS193016

Meher Kamran Aziz

Reg#MMS193031

Assignment No. 1

Spring-2020

Submitted to
Dr. S.M.M Raza Naqvi
Department of Management and Social Sciences,

CUST, Islamabad.
 Area of Research:
The purpose of this study to examine the impact of macroeconomic variables on stock market
returns of KSE 30 index. An index which based only on the free-float of shares, rather than
on the basis of paid-up capital. The rapid growth in the equity market has fascinated investors
as well as researchers, to study the volatile behavior of stock market returns as a result of
different macroeconomic factors. Equity market is not only an avenue for the investors but
also a source of capital for the firms. The stock returns from equity market are highly
influenced by multiple factors such as performance of that particular stock, overall market
conditions, prevailing economic conditions, etc. The study of aforesaid variables is important
enough to analyze the performance of the stocks. In this regard, the causal relationship
between macroeconomic factors and volatility in stock market returns is the part of many
researches. This type of studies enables the investors to make effective and efficient
investment decisions and also helps the firms to improve their market worth.
A macroeconomic factor is a characteristic, trend or condition that comes from or applies to
a broad aspect of an economy rather than a certain population. In contrast to
macroeconomics, microeconomics is the branch of economics that studies the behavior of
individuals and firms in making decisions and the interactions among these individuals and
firms in narrowly-defined markets. The central problems of an economy are What to
produce? How to produce? For whom to produce.