In this study it is examined that how much political events impact the PSX-100 index returns, ten major political events are selected from the period of 2008 to 2017. To calculate the abnormal returns, event study methodology is applied. It attempts to determine the statistical relationship and effect of these events on the PSX -100 index by using a 15 day stock market window. This study concludes that news events have a strong impact on thePSX-100 index. It also shows that the bigger the news event the greater is the impact on PSX-100 index. This study also reveals that the Pakistan Stock Exchange is “semi efficient” to the information. This study helps the investor to judge the effect of political events on PSX-100 index returns and develop strategy according to the political environment. Only major political events are selected for a selected time horizon which is not covering the all political episodes. Political conditions vary country to country and period to period. Further researches can be made by selecting different political events for any other country. This study contributes in literature and verifies the significant relationship between political events and stock market returns. Supervisor:- Dr. Hasan Muhammad Mohsin