The purpose of the study was to check the “effect of oil prices on stock prices” of the selected five South Asian countries (Pakistan, India, Bangladesh, Srilanka and Maldives) by using Johansen co-integration model during the period of Jan, 2005- May, 2015. Stock price was used as dependent variables while Oil price, Exchange rates, CPI and Interest rate were used as independent variables. The study first implied Beaulieu and Miron monthly unit root to check the stationary of the data, then the study used Johansen cointegration to check long term relationship among variables. Based on the results of Johansen co-integration, it is inferred that in case of Pakistan and India cointegration exists between stock prices and oil prices but the impact of co-integration in both countries vary, as in Pakistan oil prices have positive effect on stock prices while in India oil prices have negative effect on stock prices. However there is no cointegration among other variables. However, it can also be inferred from the results that in case of Srilanka, Bangladesh and Maldives no co-integration exists among variables. Supervisor:- Dr. Abdul Rashid