Bargain hunting drives DSE recovery despite cautious dip in turnover

Stocks at the Dhaka bourse staged a notable rebound last week as improving investor sentiment and bargain hunting drove the key indices sharply higher amid easing concerns surrounding the ongoing Middle East war and its potential impact on the domestic economy.

The benchmark DSEX index of the Dhaka Stock Exchange surged 127 points, or 2.43%, to close the week at 5,368.

The blue-chip DS30 index also posted a strong gain, advancing 54 points, or 2.72%, to finish at 2,066.

Market breadth remained strongly positive during the week, with 324 issues advancing, 38 declining and 27 remaining unchanged.

Despite the broad-based price appreciation, market activity remained relatively subdued as investors adopted a cautious stance.

Average daily turnover fell by 24% week-on-week to Tk531 crore, reflecting a wait-and-see approach among market participants who preferred to monitor whether the upward momentum would be sustained before making fresh investment decisions.

However, the overall market capitalisation of the Dhaka bourse increased by approximately Tk9,000 crore during the week, indicating a steady return of confidence among investors after the previous week's sharp downturn.

EBL Securities, in its weekly market review, said the capital market experienced a sustained recovery throughout the week, bouncing back from the steepest single-day fall recorded in the past six years during the opening session. The brokerage house noted that the sharp correction at the start of the week created attractive entry points for investors, prompting bargain hunters to accumulate fundamentally strong stocks.

Although the week began under persistent bearish pressure, sentiment gradually improved as signals emerged of a possible de-escalation in the Middle East war.

At the same time, concerns regarding immediate disruptions to the country's fuel supply began to subside, which helped restore confidence among market participants.

A managing director of a leading brokerage firm said the government appeared capable of overcoming any potential fuel shortages stemming from the Middle East tensions.

Bangladesh secured a significant quantity of fuel supplies during the past week, which helped ease investor concerns and contributed to renewed optimism in the stock market.

He also noted that the central bank's recent decision to ease capital repatriation rules for foreign investors was a positive development for the capital market. The move is expected to improve the investment climate and may encourage greater participation from foreign portfolio investors in the coming months.

Additionally, speculation surrounding a possible change in the leadership of the stock market regulator also played a role in drawing investors back to the market, he added.

Sector-wise participation showed that investors were most active in the banking sector, which accounted for 21.3% of total market turnover. The pharmaceutical sector followed with 15.2%, while the textile sector captured 9.5% of the week's trading activity.

Among individual stocks, Islami Bank Bangladesh, LafargeHolcim Cement, City Bank, Square Pharmaceuticals and Beximco Pharmaceuticals were the major contributors to the upward movement of the benchmark index during the week.

In terms of turnover, Orion Infusion emerged as the most traded stock, followed by City Bank, Olympic Industries, BRAC Bank and Robi.

All major sectors posted positive returns during the week. The cement sector led the gains with a 7.6% increase, followed by the information technology sector with 5.3% and life insurance with 4.6%.

Interestingly, many Z-category stocks and loss-making non-bank financial institutions dominated the gainers' list. International Leasing, Peoples Leasing, FAS Finance and Fareast Finance each soared 50%, while Premier Leasing advanced 42.31%.

On the other hand, Saif Powertec was the worst-performing stock of the week, declining 6.94%. It was followed by Green Delta Insurance, Ring Shine Textile, Dula Mia Cotton and Hami Industries, which also posted notable losses.