Given the current momentum, Pakistan's premier Karachi Stock Exchange (KSE) could be crossing the 5,000 point mark before the year is out, according to Ace Securities, a brokerage firm.

Since last October, when it was around 2,400 points, the index has been reaching new highs with every passing week to currently stand at the 4,350 point mark.

"The rally has been brought on by proper fundamentals and not from overwhelming speculative interest. Given the low interest rates, people who have in the past shied away from equity investments, are quite active now," said Iqbal Ismail, chairman of Ace Securities and a former two-term member of the board at KSE.

Interestingly, exposure from foreign institutional investors has not been central to the upward mobility shown by the main index.

"The gains have been spread across key scrips and sectors. At the broader level, investor interest has also been boosted by the privatisations being carried out at the leading public sector entities such as Habib Bank Ltd., Pakistan Telecom and Pakistan State Oil (PSO)."

Incidentally, Kuwait Petroleum is among the prospective bidders for PSO. The stock exchange is also carrying out reforms on key fronts. A possible high priority area could be to expand the futures market, currently limited to 13 scrips.

Another major area could be to do with 'badla' trading, which is providing loans against shares. "There has been some talk about it," said Ismail, who is looking to align with brokerage firms here to get overseas Pakistanis to get into the equity culture in their home country.

"So far, the gains on the stock exchange have seen limited participation from Pakistani residents abroad. Obviously, they believe they can have good choices elsewhere. We feel that with proper marketing, we can get them to take a closer look at stocks in Pakistan."