KARACHI, Feb 21: The Karachi Stock Exchange index of 100 shares crossed over the magical figure of 15,000 points for a brief moment on Thursday, prompting traders and brokers to clap and dance in glee all over the bourse.

The post-election euphoria has seen the market rise by nearly 900 points within a week. Concurrently, the rupee has appreciated by about 2.5 per cent in the last three days to Rs 61.75 from Rs 63.17 to a US dollar.

The CEO at AKD Securities, Nadeem Naqvi, said that all of this showed that the economy was not the issue but the political uncertainty and instability and the markets were now catching up with their valuations. He thought that the inflow of foreign funds and ‘smart money’, which was making its way back into the country, was helping in strengthening the Rupee and making the stock index shoot through the roof. “The market has attracted US $100 to $120 million in the last one week alone,” he said, and supported his claim by referring to the average daily value of shares traded at the KSE, which had doubled in the last three days to US $700 million from US $350 million. With the ‘badla’ amount capped at Rs 55 billion, much of the rush in orders was ‘cash buying’ both by foreign as well as domestic institutions and pension funds, which had stood on the sidelines with a stockpile of cash, he said.

Stockbroker-turned-banker Arif Habib said that the conduct of peaceful elections had restored investors’ confidence, which had been shattered by the Dec 27 event. He said that it was after a long time that Pakistan was being projected in an intensely positive light by the international media.

To coincide with those good things, he referred to the stellar corporate financial results that were pouring in during the current reporting season from commercial banks and insurance, oil marketing and oil and gas exploration companies. He said that as most of those companies had taken ‘unrealised capital gains’ on their books, the bottom lines were shining bright.

Mr Arif said: “The rise in the stock index to an all-time high can also be a sign of expectations of confidence in the economic policies of the government which now comes into power.”

But he cautioned investors against entering into the ‘speculative mode’ as underlying economic issues still remained to be addressed. Mohammad Sohail, director, stock broking at J. S. Global, concurred with the view that the primary concern of the market was political instability during the election, which had now been set to rest.

He said: “A government of national consensus could be expected to take both the country and the market forward.”

So has the market hit the top? Mr Naqvi at AKD Securities said: “We are nearly 60 per cent into the rally”. He said that before the current euphoria began the KSE was trading at a price-to-earnings (p/e) multiple of 9.5 times the 2008 earnings, which had now risen to 10.7 to 11.3 times. His calculation showed that without the political uncertainty, Pakistani equities should be valued at the p/e ratio of 12. He said that Pakistan was forecasting an earnings growth of 15 per cent in 2009, compared with negative returns in G-7 countries and 10 times in the Asian markets.

But even with all the singing and dancing, analysts and investors said they were keeping one eye on the index, which in the Pakistani market has carried a long history of springing surprises — not always too pleasant.