European Journal of Business and Management www.iiste.org ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) DOI: 10.7176/EJBM Vol.11, No.16, 2019 81 The Impact of Inflation on Pakistan Stock Exchange Mohammad Muzammil* Dr. Sohaib Uz Zaman Amna Asim Salwa Haider Karachi University Business School, University of Karachi. Main University Road Karachi - 75270. Sindh, Pakistan. Abstract The aim of the study is to determine the impact of inflation on equity prices in Pakistan's economy. The examination time frame is 2012-2018; monthly information was gathered from the State Bank of Pakistan and the Pakistan Stock Exchange. The information was dissected utilizing the relapse model and factual consequences of these investigations to demonstrate a negative connection among expansion and stock costs. All exploration as of late has demonstrated that inflation and stock costs have a positive relationship universally. Some studies, however, indicated that inflation and equity prices were negative. In general, the stock market provides an overview of investors whether they want to invest in the financial market. Equity prices also affect inflation. Keywords Stock price, Inflation, Karachi Stock Exchange, KSE 100 index, CPI DOI: 10.7176/EJBM/11-16-11 Publication date:June 30 th 2019 Introduction The equity markets are a trading venue where public companies' shares are sold and sold. In addition to the bond market that the lender's trade, stock exchanges are invaluable financial companies for companies. The behavior of the securities markets of the country can serve as a reliable indicator of the economy. The Karachi 100 FX index is an important stock market index that monitors the performance of the largest market share companies from each sector of Pakistan ehf. Registered on the Karachi Exchange, as of October 15, 2012, is a free float index. KSE 100 has an initial value of 1,000 from November 1991. There are three noteworthy stock trades in Pakistan, the Karachi Stock Exchange (KSE), the Lahore Stock Exchange (LSE) and the Islamabad Stock Exchange (ISE). Be that as it may, on August 27, 2015, an understanding was marked in Islamabad to build up Pakistan's stock trade, which joins vendors of Karachi, Lahore, and Islamabad. Also, the securities exchange is estimated in files and the file is a technique for computing the exhibition of every single financial exchange. In this manner, there are various pointers in Pakistan that measure the financial exchange. Three of these lists are the most famous among the KSE, the KSE 30 list, the KSE 100 record, and the KSE All Stock Index (Ghulam et al., 2015). Inflation is characterized as the expansion in normal costs for all merchandise and ventures over a given period and can likewise be characterized as a lasting increment in all-out costs, which means a reduction in buying power and an expansion in average cost for basic items (Mousa et al., 2012). In this way, expansion is kept up in a steady circumstance; the essential worry of money related arrangement creators is as expressed in financial approach goals national bank (Mishkin, 2004). This is on the grounds that swelling in a specific nation reflects monetary advancements and value solidness in that nation likewise influences a nation's exhibition on the universal market (Daniel Chidothi et al, 2013). Different investigations break down the connection among profits and swelling over an any longer period. For instance, Jaffe and Mandelker (1976) found a negative connection between joint profit and swelling in short times for testing, yet this proportion ends up positive when the creators accept that the long haul is 1875-1970. This positive long haul inflationary impact is affirmed by Boudoukh and Richardson (1993) which manages the connection among gainfulness and swelling on US and British stock trades somewhere in the range of 1802 and 1990 (del Camino Torrecillas et al., 2013). Because of scarce evidence, there has been a need to get a clear picture of Pakistan Stock Exchange in order to devise the strategies to control the inflation. The current study was planned to find the association between Inflation and Stock Prices, which would be helpful in paving way for future studies, researcher and policymakers. Literature Review Omran et al. (2001)examined the effect of inflation on the o Egyptian securities exchange performance is talked about with a parallel reconciliation investigation through the ECM. Accordingly, there was an extensive long haul and momentary connection between changes that affected swelling in the Egyptian financial exchange as a rule.