Purpose – The motive of this study is to scrutinize the impact of macroeconomic determinants on market capitalization in the context of Pakistan.
Design/methodology/approach –Annually time series data for the period of 1995-2014 has been collected. Descriptive statistic, Correlation and Regression analysis techniques have been employed in order to ascertain the alliance among stock market performance and pre-specified macroeconomic determinants.
Findings –The study results pointed that there is strong correlation between Market Capitalization, Foreign Direct Investment, Money supply and Oil prices. The results of Regression analysis demonstrated that Foreign Direct Investment, Money supply and Gross Domestic Product have significant positive relationship with Market Capitalization while Oil prices have significant negative relationship with Market Capitalization.
Originality/value –The foremost contribution of current study is that it adds value to existing literature by exploring connection between macroeconomic determinants and Market Capitalization in a developing economy.