ABSTRACT

The question ofwhether or not stock prices can be predicted by macroeconomic indicators in an economy is ofserious concern both to the academics as well as the practitioners all over the world. There have been controversies among scholars, researchers and finance professionals with regards to what triggers the movement in the stockprices and it is against this backdrop, that this study investigated the effect of some selected macroeconomic indicators on stock market performance in a developing economy using Nigeria Stock Exchange Market as its case study while E-views 10 statistical software was employed using the ARDL method of estimation, based on the empirical findings, ASI was found to be negative for the current year and one year lag period while INF was equally negative and is insignificantfor the current year and the previous year, while in the long run, Inflation Rate showed a positive relationship with ASI, but insignificant at 5% level ofsignificance. On the other hand, the long run estimates ofM2 had a positive relationship with ASI in the long run and also shows to be a significant contributor to All Share Index at 5% level ofsignificance while RGDP had a negative relationship with All Share Index and also significant in the long run. and based on this findings, they study recommended the following; the CBN should through their monetary’ andfiscal policy implement actions that would ensure interest rate stability and prevent frequent increase in rates which has potentials to distort stock market activities in Nigeria and also must continue to pursue policies that would promote stable exchange rates and also attract foreign capital inflow that would ensure regular supply of forex.