This study investigates the impact of economic factors and noneconomic factors on the Pakistan Stock Exchange (PSX) from 2000 to 2017. Noneconomic factors in this study are terrorism and political system while economic factors are foreign exchanges rate, gold prices, and global financial stress. 5 models are developed and run to check the impact of individual factors explicitly. The finding of this study suggests that both economic factors and noneconomic factors have impact on PSX like terrorism significantly diminishes PSX returns. In democratic political system, investor feels confident which positively influences the PSX return. FX movement displayed negative significant relationship with PSX. Due to lack of education about the portfolio management, investors of PSX are not considering gold as risk diversifier. Global financial stress has substantially reduced PSX return confirming integration between PSX and global financial markets.
Keywords: Terrorism, Political System, Foreign Exchange, Gold Prices, Global Financial Stress