Abstract
The main objective of this paper is to find the impact of inflation, interest rate, growth and profitability on stock returns. The data for profitability and growth have been collected from 5 years financial statements of 30 companies listed on KSE, covering 15 different sectors, whereas data for interest rate and inflation have been collected from State Bank of Pakistan and Consumer Price Index, for a period of 5 years i.e. 2008-2012. To test the hypotheses empirically, descriptive statistics and multiple linear regression techniques are used. Results show 54.8% correlation between predictor and predicted variables whereas 30% variation in predicted variable is explained by four significant predictor variables namely profitability, inflation, interest rate and growth. Moreover, Inflation has a statistically significant negative impact on stock returns whereas profitability, growth and interest rate have statistically significant positive impact on stock returns. The findings of this study are consistent with previous studies on the same topic, conducted in other markets. This study will be helpful for individual as well as institutional investors to estimate the expected returns of stocks based on the above mentioned variables before investing, thus enabling them to make better investment decisions.

Rashid Mehmood Khan, Dr. Faid Gul , Ehtisham Ali. (2017) Factors Influencing Stock Returns in Listed Firms of Karachi Stock Exchange, Paradigms , Vol 11, Issue 2 .
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