DefinePK

Abstract

The study investigated the impact of South Asian stock markets on the performance of Pakistan's stock market, specifically using the KSE-100 Index. The study analyzed how fluctuations in regional stock market indices (Nifty 50, DSEX, NEPSE, and MASIX) influenced the performance of Pakistan’s stock market. Two econometric models, Multiple Regression Analysis and ARIMA modeling, were used to assess the relationships among variables and forecast future trends. The connection among macroeconomic factors and the performance of the stock market in Pakistan already exists in literature. However, apart from macroeconomic factors, the performance of major South Asian stock exchanges (India, Bangladesh, Nepal, and Maldives) and how much these are likely to influence the stock exchange of Pakistan is also examined. The findings indicate that the Pakistani stock market is heavily affected by regional stock markets, specifically the Indian, Bangladeshi, Nepalese, and Maldivian stock markets. Of them, Nifty 50 of India was most strongly correlated with the KSE-100 Index, which indicates economic movements and investor sentiments in India heavily impact the Pakistani stock market. DSEX (Bangladesh), NEPSE (Nepal), and MASIX (Maldives) did also show a positive correlation with the KSE-100 Index but to smaller magnitudes than Nifty 50.