Karachi: Pakistan's benchmark stock index may rally more than 5 per cent and erase half its decline from a record should the measure climb above 10,000, according to Auerbach Grayson & Co.
The Karachi Stock Exchange 100 Index rallied to within 0.5 per cent of the 10,000 level on January 19 only to retreat to 3.1 per cent below it on Monday.
A rise above that level would probably propel the index to 10,260, the so-called Fibonacci retracement level for 50 per cent of its drop from an all-time high almost two years ago, said Richard Ross, a global technical strategist at Auerbach Grayson.
The KSE 100 plunged 69 per cent from a peak in April 2008 to a five-year low in January 2009 as the South Asian nation was forced to turn to the International Monetary Fund for a bailout after its foreign-exchange reserves shrank 75 per cent.
The index jumped 60 per cent last year as increased IMF support prompted Standard & Poor's to raise the nation's credit rating and the Pakistani government started the Rs.20 billion State Enterprise Fund to revive stocks.
"This is a good support level to buy, and the 10,000 level will be tested," Ross said in a telephone interview from New York on Friday. "It's a good indication for Pakistan when the market is acting so well in the face of such news around the world."
The index may rise to about 11,550, the 61.8 per cent retracement level and a 19 per cent increase from Monday's close, in 12 to 18 months should it cross the 50 percent mark, Ross said.
