LAHORE - Double digit earnings growth and continuous foreign inflows can take the countrys benchmark KSE index to 14,000 points mark in 2011, experts said and added that 2010 index target of 11,500 was achieved in Dec 2010. They observed that the year 2011 started on a weak note amid political uncertainty post the departure of one of the key coalition partners from the government. However, the market witnessed a sharp rebound and gained 261 points (or 2.2 percent) the following day. Historically, the market on an average has offered a 5.7pc return in the first month of the calendar year during the last 15 years (19962010). Taking a critical look, the return has been negative on 6 occasions in this period, including 2009, when the fall though had been quite expected, post lifting of the infamous price floor in late Dec 2008. They were of the view that January is traditionally considered one of the better months for the market because foreign investors return after the year end vacations and local players restructure their portfolios. Another key influencing factor is the investor interest in stocks that are expected to announce healthy payouts in their December quarter results especially in the banking, fertilizer, power and oil sectors. Strong earnings expectations are further instrumental in the market performance of such stocks, they added. Umer Ayaz, a stock market analyst, said after posting 28pc growth in 2010, market is all set to record another bumper year in 2011. After posting 28 percent growth in 2010 and average EPS growth of 21 percent during FY03-10, the market is all set to record another bumper year. With BMA Universe expected to clock in a phenomenal EPS growth of 24pC for FY11E, we target a conservative KSE100 level of 14,000 for 2011. While mean reversion and regional valuation convergence hint of much more, the key for higher upside remains contingent on fiscal discipline. Driven by overall theme of pricing power and domestic demand, experts flag over-weight stance on Fertilizer, OMCs and IPPs with POL, APL, LUCK and FFC being High Conviction Ideas for 2011. Experts said that in spite of asset quality concerns, stable net interest margin (NIM) and relatively lower provisioning would drive NBPs earnings. They added that with potential earnings growth of 34 percent in FY11, POL remains top pick which is trading at FY11 and FY12 PE of 7.3x and 6.7x with decent dividend yield of 9pc and 10pC respectively. Engro Corporation is Pakistan largest conglomerate with diversified portfolio of investment in 4 subsidiaries and 3 joint venture companies. Engro remains a long term play on Pakistans fertilizer and consumer sector. Having one of the highest dividend yield, the Hubco stock is available at an attractive FY11E and FY12F dividend yield of 14 percent and 16 percent, respectively. Amidst political and security concerns, Hubco with low beta (0.7) is an ideal defensive stock for the portfolio. Experts recommend 'Buy on Nishat Mills (NML), Pakistans largest integrated textile unit. Contrary to common belief, the major portion of valuation is contributed by NMLs investment portfolio which arrives at Rs49 per share. DK Khan Cement, one of the largest cement player in Pakistan currently provides an upside potential of 39 percent to Sum of Parts (SoP) target price. Major portion of DGKC value is contributed by strong portfolio worth Rs18.4bn (Rs51 per share). which is 60 percent higher than its own market cap. Among power companies, HUBC and KAPCO which are likely to announce cash dividends in the vicinity of Rs2.5-2.75 per share, could also see a decent rally in their respective share prices. Fertilizers too could continue the current rally on anticipation of cash payout announcements alongside the full year results. In oil stocks, POL and APL could be the ones declaring exciting cash payouts.