Stock markets are of prime importance for the stability and boosting of an economy; its development and formation of capital. An active and stable stock market induces effective and successful organizations. The stability of stock markets is always disturbed by fluctuations in certain macroeconomic variables. This study is an endeavor to find out the effect of these variables on the Pakistan stock exchange index both on long term as well as short term bases. Statistical tests were applied on the quarterly time series data from January 2004 to December 2018. The results of the study show that there is negative association among the rate of inflation and share price while the stock prices have positive association with exchange rate and rate of interest. Findings of this study could help the investors to gain positive returns from investment in stock market.

The current study investigates the real influence of the rate of exchange in real terms, GDP in real terms, money supply and infrastructure on the balance of trade in Pakistan by employing Johnson co-integration and ECM. The real GDP and infrastructure positively affected mini missing the gap of trade deficit to improve the trade performance of the economy of Pakistan.In contrast, the factor of effective exchange rate and money supply negatively affected on trade deficit of the country. The rate of R-Square is 0.85, it tells that 85 percent variation in the balance of trade is captured by independent variables.The important recommendation of this research is that the exchange rate should be stable and consistent with the equilibrium path. The negative ECM value of -40 obviously pointed out that there is a 40 percent convergence of the total said parameters in mini missing the gap of trade deficit for the economy of Pakistan.