During Wednesday’s trading, stock indices in Pakistan displayed some volatility but at the end of the day, very little fluctuation in the Karachi benchmark index KSE-100 was observed. Rising 14 points from the end of Tuesday’s trading, the KSE-100 index closed the day at 16,908 points.

A minor upturn of 0.09% may not draw much attention in the US or other parts of the world, but where instability has been the order of the day for more than a decade, some sustained economic stability would boost investor confidence in a major way.

KSE 100 Index - 1.23.2013

A similar story unfolded at the Islamabad Stock Exchange where the index progressed by 5 points to 2,443 points. While the index at Lahore Stock Exchange exhibited the opposite trend with a fall of 70 points to 3,328 points, the general feeling is that things may be slowly getting back on track.

Yet, it may be too early to tell whether the political and security situation would adversely affect Pakistani stock indices in the coming days. Most of the top 10 gainers at the KSE on Wednesday are foreign multinational corporations. Among the top 10 losers, on the other hand, eight companies were Pakistani.

The picture was not very rosy at the Lahore and Islamabad exchanges either. Most of the top 10 gainers at the LSE belong to the Oil, Gas and Power sectors, while at the Islamabad exchange, the top 10 gainers were mostly split among companies from the Oil, Gas, Automobile and Beverages sector.

Even as the macroeconomic environment seems to be stabilizing judging from the steadily rising stock indices, Pakistan’s security situation remains precarious. A number of people were killed, and some others wounded today in a blast.

This raises questions about its short and mid-term security outlook, upon which rests investor confidence to a large extent. Energy shortage, high debt levels, twin deficits, political uncertainty, lack of security and breakdown of law and order coupled with lack of clear policy outlines and vision for the economy in the short, medium and long terms may not allow for a sustained upsurge.

Yet, with two major political stumbling blocks averted – at least temporarily – a short term lull, relatively speaking, in instability can be expected. In the coming weeks, one might see a short term steady growth or maybe upsurge in the most sought after stocks in the stock indices, at best, but long term steady growth remains elusive at the moment.