Empirical investigation of relationship between macro-economic variables and stock price in CSE

The starting point of this research is the research problem; Relationship between macroeconomic variables and stock prices in Sri Lanka stock market. Depending on research problem literature review is conducted in order to specify research question and construct framework. The research purpose and research question reveal that this study is primarily descriptive. As theories exist and conclusions are drawn from theories this study is deductive one and quantitative research method is used. Data is collected through secondary data from considering the ASPI index of ten years from 2007 to 2016 as monthly vice. The impact of macroeconomic variables on stock prices in Sri Lanka stock market has been examined through descriptive statistics such as mean, standard deviation and coefficient of variance, and inferential statistics such as correlations and regression models by using E-views time series analysis. Results revealed the research findings that there Interest rate and Exchange rate have insignificantly negative relationship with stock prices. At the same time Inflation rate has significantly positive impact on the Stock price. Further, Money Supply has significantly negative relationship with stock price.