In this paper we have studied that impact of macro variables on Karachi stock exchange. Karachi stock exchange is very interesting topic for the discussion. Karachi stock exchange is known as one of the oldest stock exchange of Asia. Karachi stock exchange is the largest stock exchange of Pakistan. Karachi stock exchange is the dependent variables and inflation, interest rate and exchange rate and GDP are the independent variables. We have taken the data from period 1992 to 2012. We have found that there is 80 %variation. Therefore we can say there is a strong relationship among the variables. While other variables have shown that GDP, interest rate and inflation has strong relationship with kse stock index while interest rate have negative relationship with Karachi stock exchange. The increase and decrease the stock prices will affect the performance of the economy. In this paper researcher want to found out the fundamental marc variables which have impact on stock exchange and also want to found out that what are the impact of these variables on the government policies like monetary and facial policy. Fundamental macro variables are export, money, supply, interest rate.
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