This study aims to explore the economic factors which affect the investment in Karachi Stock Exchange (KSE) Pakistan. In any country its economic factors such as Real Gross Domestic Product (GDP), inflation and interest rate have a significant influence on investors to invest in the stock market. Therefore to determine the impact of these variables, we have conducted a cross sectional study and analyzed the past 21years (1990-2010) secondary data of our independent variables real GDP, inflation and interest rates and for relating these variables with the investment in KSE, we have taken KSE 100 index The analysis of secondary data shows that GDP has a strong positive correlation with investment in KSE, inflation has also strong positive correlation with it interest rate is negatively correlated with investment in KSE. The investors can use the data and information of inflation, interest rate and GDP to predict the stock prices trend and increase their return on investment.
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