摘要：This empirical study design to investigate the association between stock price and inflation in Pakistan. Many previous studies around the globe examine the relationship between stock price and inflation and proposed different results, many of them found that there is positive link between inflation and stock price. On the other hand some studies realized the negative relationship between these two terms. This research is based on past ten years data of Karachi stock exchange (KSE 100) and the statistical results of this research shows that there is negative relationship between stock price and inflation. Furthermore, when prices of stock are low firms avoid to enter in capital market until the central bank provide alternate for firm’s plan to invest in capital market. Moreover, firm’s equity value is also hit by the startling inflation rate. Similarly tightening of monetary policy can reduce inflation and stock prices both as individuals will be left with less money to buy goods or buy stocks.
