Its only a short term phenomenon. PSX is expected to attract fresh flows due to reclassification in MSCI. India, on the other hand, has been around for some time now will grow only gradually unless the reforms push the potential economic growth rate and hence the equity valuations. So their flows have matured and now. However, Pakistan's stock market is only a fraction in size to that of India's so a comparison other than the returns on the indices doesn't really make sense.
You can, its not that difficult really, especially with Online trading available with a deposit requirements of as less as 2500 INR.
PSX is one of the major sources of laundering money. People usually send black money abroad and then invest that money in PSX being a foreign investor. Saves them all crucial capital gain tax and whitens the money as well.
General Mike Mullen.