KARACHI - Foreign players made a net investment of $45.285 million at the Karachi Stock exchange in just two sessions (Monday and Tuesday), according to the National Clearing Company of Pakistan Ltd. Only on Tuesday, offshore investors invested $21.3 million (gross buy of $24.9 million and gross sell of $3.6 million). Moreover, total investment made by foreign players on Monday dramatically inched up to $23.99m (gross buy of $26.5m and gross sell of $2.5m). This foreign interest in the local stock market has changed the markets direction and index is travelling towards sky while benchmark gained over 450 points in last three sessions. Most of the market experts are of the view that the current foreign interest in the equity market is due to the availability of attractive low-priced stocks. Shahid Ali at HMFS expressed that, it would be unfair to say that Mondays and Tuesdays bullish momentum can be attributed to foreign investors who invested around $24 million only on Tuesday. We need to give credit to local investors who keep their faith in philosophies of valued investors. We are of the view market is running with heavy fuel as if you are travelling on a missile. While analyst Hasnain Asghar Ali stated, the dollar inflow mania kept the local participants on edge of their seats, since the rally has been initiated by participants from foreign land earnings multiples were substantially increased, as indeed the local equity market is still offering stocks with consistent dividend and growth record at substantial discounts. Meanwhile, positive news flow during the month of August has fetched over $95m Foreign Portfolio Investments, highest monthly flows since February 2008. This was at the back of reversal of country risk premium led by contained twin deficits and IMF assurance of continuous funding till December 2010. Additionally, the expected flows from US and Friends of Pakistan are likely to improve further liquidity and provide more fiscal space for government to incur development expenditures. This is reflected in the stock market and Eurobond rally off late. As highlighted earlier, since IMF approval of augmentation of new loan ($3.2b) on August 7th, followed by SBP rate cut of 100bp and rating upgrade by S&P to B-, the stock market mood has completely turned bullish and the index has surged by 12 percent in August, highest in the Asia Pacific region. The CDS and yields of Pakistan sovereign bonds have fallen below 10pc from a peak of 50pc in October 2008. Does this mean that the Pakistans macro is on the right track and markets will continue to flourish? Our answer is 'no. Despite success in Swat operation, the countrywide fear of law and order situation is still prevailing, while no visible signs of foreign direct investments are appearing, said Muzzammil Aslam at JS Research. Moreover, tight visa restrictions of G-8 continue to undermine the export potential, and loadshedding and expensive power tariffs are pointing towards the vulnerabilities of Pakistans economic growth. Currently Pakistans market is trading at 39pc discount to region. The question is why our market should trade at par with the regional giants such as China and India, given both economies are expected to grow by 10.1pc and 7.7pc, respectively, while their earning growth is expected to be around 22.1 percent and 20.3pc, respectively for the next year. In comparison, Pakistans GDP is likely to be around 3.0pc and earning growth of 20pc. Secondly, the depth of the Pakistani market is increasingly hurt due to lack of listings on the stock market. The above argument can also be validated from the divestment of RBS (formerly ABN Amro) from Pakistan. RBS sold its banking franchise to local bank MCB for $90m. The sale proceed is even lesser than the ABN Amro Banks acquisition of Prime Bank worth $227m in 2007.