It takes two to tango and the Indian stock market has found a partner in Pakistan.

On Tuesday, Karachi Stock Exchange’s KSE-100 ended on 11,130, after touching an intra-day high of 11,223 on a day that saw the index touching a low of 11,008. The BSE Sensex in India, on the other hand, closed at 10,905, after touching an intra-day high of 11,017.

The KSE volumes on the day touched 39.7-crore shares, valued at over 5,292 crore Pakistani rupees. One Indian rupee is equivalent to 1.36 Pakistani rupees.

Likewise India, the major driver has been muscular corporate performance in all leading sectors. Banking Stocks have got more than doubled. Besides, oil exploration and distribution, fertilisers and cement have done very sound.

To add similarities to Indian scenerio, more than industry performance, what have worked wonders for the stock market in Pakistan is the rising FII inflows. Pakistan is seeing extremely positive signs from the FIIs like Merrill Lynch. Mainly led by the US-based companies, the FII’s have pumped in over $600 million into Pakistani capital markets since July, 2005.

FIIs clearly see a market that was undervalued and offered a good upside. Mostly, Pakistani companies were available at a PE of 10, 11 or 15. The presentation of lower prices caught up the FIIs. To add further, the Pakistani companies had a good growth story. The local institutions also got into the act provoked by the FII buying and hence lead to the upward movement of Index.

This present bullish rally has been on since January, 2002, when the Index was 1,200, and on an average the market has grown by 80% year-on-year and has been one of the best performing markets in the last one year.

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