Financial Daily from THE HINDU group of publications
Friday, Dec 26, 2003
Financial Daily from THE HINDU group of publications Friday, Dec 26, 2003 |
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Foreign Relations Markets - Stock Markets Markets mirror gains on Indo-Pak peace moves Abhrajit Gangopadhyay
Bangalore , Dec. 25 STOCK markets in India and Pakistan have been steadily going up as the nuclear neighbours smoke peace pipes. Benchmark indices of both the countries - the 30-share Bombay Sensitive Stock Exchange (Sensex) and the 100-share Karachi Stock Exchange (KSE-100) - have topped 73 per cent gains in calendar 2003. KSE-100, which closed at 4419.50 at the end of Wednesday's session, has gained 1874.50 points since January this year, up by 73.65 per cent. Compare this with 2391.54 points gain of Sensex during the year, up 73.57 per cent during the same period. Early December, following talks of resumption of air-links, the Sensex vaulted 116 points up and KSE-100 recorded its highest ever gain of 195 points in a single day. Historically, stock markets in Pakistan have swung tracking Indo-Pak relations. Whenever there had been an issue of political tension like the Kargil War, Pokharan blast and similar other events, the KSE-100 had dived. On the other hand, peace efforts like troops withdrawal from the borders were cheered by broad-based rally across Karachi, Lahore and Islamabad bourses. When India withdrew troops from the border in October last year, Pakistan's stock market charged in a bull-run. The KSE-100 witnessed a sharp rally with the index rising consistently from 2037 on October 11 to 2237 on October 25, up 200 points or 10 per cent in 10 trading sessions. On the flip side, Pakistan markets have lost heavily every time relations soured between the neighbours. The 1999 Kargil war saw KSE-100 plunging by close to 400 points or 25 per cent to 1040 during the period from May 24 to June 15, 1999. Market watchers said that recent peace moves augurs well for the two economies, as both could cut their defence expenditure and plough back the savings to developmental efforts in order to boost growth of respective gross domestic products. Currently, India spends close to 3 per cent of its GDP on defence and Pakistan close to 6 per cent.
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