Macroeconomic Factors do influencing Stock Price: A Case Study on Karachi Stock Exchange

Abstract

The paper is about Determinants of Stock Price: A Case Study on Karachi Stock Exchange. The objective of this study is to analyze the factors influence in determining the share price of some companies listed in KSE. The study also analyze the influence of liquidity, leverage, profitability, growth, size of the firm and dividend rate on market price per common share. The study reveals that some qualitative factors namely, company goodwill; market sentiments; company announcements; AGM; unexpected circumstances; analysts’ report; technical influence; print and electronic media; hype; change in government policy; international situation; political turmoil as well as some quantitative factors like, dividend; market capital; price/earnings ratio; EPS; net income; return on investment; retained earnings; merger; stock split; margin loan; demand & supply of stock; inflation; interest rates; exchange rates affect the stock price. This study also finds that price earnings ratio; stock price rumor; demand for the share; changes in government policies; economic conditions are the most influential internal; external; economic; political; and environmental factors respectively regarding stock price. In addition, this paper reveals that 65.0 percent of the variation in stock price is explained by cash flows, leverage, profitability, growth, market capitalization, and dividend.