Karachi: The KSE-100 index witnessed a volatile trading week, closing down by 233 points or 0.3% at 85,250 points. The downward trend was primarily influenced by the commercial banks and power sectors, which experienced significant losses due to regulatory and tax concerns.

According to AKD Securities Limited, the banking sector was impacted by worries about additional taxation on Adjusted Depository Receipts (ADRs), which are expected to affect profitability in the upcoming quarter. Meanwhile, the power sector struggled under continued government scrutiny of Independent Power Producers (IPPs). Additionally, the fertilizer sector also underperformed, with notable losses attributed to lower-than-expected payouts from major companies like EFERT.

Despite these challenges, there were positive developments during the week, including the successful conclusion of the SCO summit and a noteworthy rise in the State Bank of Pakistan’s foreign exchange reserves, which crossed the US$11 billion mark for the first time in two and a half years. Government bond auctions also exceeded expectations, raising PkR716 billion against a target of PkR400 billion, with declining yields on short-term securities.

Market activity, however, declined from the previous week, with average daily traded volume falling by 16.5% to 432 million shares. On the currency front, the Pakistani Rupee remained stable against the US dollar, closing at 277.6.

Sector performance varied, with Tobacco, Closed-end Mutual Funds, and Engineering sectors leading gains, while Woolen, Property, and Transport sectors lagged. The banking sector saw significant net selling, particularly with the National Bank of Pakistan divesting its stake in AGL to Fauji Fertilizer Company.

Looking forward, the market is expected to benefit from declining interest rates and the ongoing earnings season, offering potential for equities investment, especially in high-dividend-yield stocks that could re-rate favorably against fixed-income returns.