LAHROE - The market continued with its upward thrust, on the back of continued robust corporate results for the quarter ended December 2012 and steady foreign portfolio investment inflow. The KSE 100-index closed at an all time high level of 18,185 after gaining 0.6 per cent WoW with decent average trading volumes of 324m shares, up 5 per cent WoW. Foreigners were net buyers of $10.5m during the week.Experts said that local stock market saw another historic week with local and foreign fund managers support. Index closed to an all time high level to 18,185 with daily volumes rose to Rs.9 billion on average. Major activity was witnessed in Engro as it gained 8 per cent during the week amid positive development on gas supply. National Bank and Hub Power followed suit after announcing handsome payouts for their December results, while telecom sector witnessed heavy volumes amid uncertainty regarding future of higher LDI business. Further, lower than expected CPI announcement also helped index. Going forward, announcement on caretaker setup will lead the sentiments.Nauman Khan, a capital market expert, observed that Karachi’s benchmark index gained 5.4 per cent or 931pts in the month of February 2013. This extends the recent bull-run to consecutive 9-months (Jun-12 to Feb-13) positive closing in which the market has rallied 32 per cent to reach US$46 billion. This continuous positive monthly gain for 9-months has happened for the first time since inception of KSE index in1991 and surpasses previous best 8 consecutive months rally witnessed during Aug-05 to Mar-06, where the market cumulatively gained 60 per cent.This heightened investors confidence is primarily attributed to significant reduction in the policy rate of 450bps since July, 2011 and active foreign buying ahead of crucial elections likely in May 2013. With index achieving our mid-year target of 18,000 slightly ahead of time, we re-iterate that index can make a new high by crossing 19,500 in calendar year 2013 as mentioned in our strategy note dated December 12, 2012. Major risk to our assessment comes from abrupt depreciation of PKR arising from weakness in the external account due to IMF repayment and domestic political noise.During February 2013, average traded volumes improved to Rs7.3 billion (US$74mn) up 79 per cent from January 2013 and better than last 12-month average of Rs4.8 billion (US$51mn). This rising activity in the month of February has happened after a gap of 25-months. In terms of shares, 285mn shares traded hands on an average in February, up 78 per cent from 160mn shares recorded in January and are highest since April 2012. Encouragingly, the individual investors are returning to the exchange as their participation improved to 51 per cent in February, which fares better than last 12-months average.Another key factor that has helped the Pakistan market to maintain its positive momentum is continuous foreign flows. With the exception of 2-months (June and December 2012) foreigners have remained net buyers. During last 9-months foreigners have bought shares worth US$682mn and sold US$589mn resulting in a net buy of US$93mn (US$162mn ex Hubco). In February alone, foreigners bought shares of US$78mn shares and sold US$49mn shares rendering into net buy of US$29mn. In case the elections are held on time as per the constitution and there is no major disruption towards the political transition, then the foreign flows will remain decent, we think.Experts raise earnings forecasts for local E&Ps by 1-3 per cent for FY13E & 3-7 per cent for FY14F, incorporating (1) increase in our Arab Light crude oil price assumption, (2) higher PKR/US$ parity and (3) Maramzai-2 production from April 2013. We also tweak up our cost estimates. They also roll forward our Target Prices and increase them by 7-10 per cent.