Dhaka stocks bounce back on buying spree amid global uncertainty

The Dhaka Stock Exchange (DSE) recovered last week, with key indices closing higher as investor participation strengthened and selective buying resumed. The market began the week cautiously amid fuel-price adjustments and geopolitical tensions in the Middle East, but sentiment improved as investors reassessed short-term risks.

By the end of the week, the benchmark DSEX index gained 42 points to close at 5,257. The blue-chip DS30 index advanced 25 points to 2,015, while the Shariah-based DSES edged up 0.21 points to 1,067. However, the SME-focused DSMEX index declined sharply by 36 points to settle at 1,118.

Trading activity also improved significantly during the week. Average daily turnover rose 10.33% to Tk903 crore, compared to Tk818 crore in the previous week. Total weekly turnover stood at Tk4,514 crore while market capitalisation increased by 0.28% to Tk6,87,550 crore from Tk6,85,632 crore a week earlier.

Out of 412 issues traded on the DSE, 194 advanced, 168 declined, 28 remained unchanged, and 22 issues saw no trading activity.

Market insiders said investors initially remained cautious following the government's fuel price adjustment and uncertainty surrounding the ceasefire negotiations in the Middle East. The concerns triggered broad-based selling pressure during the early part of the week, causing declines across most sectors.

However, the situation began to improve from the middle of the week as signs of progress in Middle East ceasefire discussions encouraged investors to reassess near-term risks. This led to increased buying in undervalued and oversold stocks.

Selective positioning in December year-end listed companies ahead of expected earnings disclosures and dividend declarations also supported the market recovery. Investors appeared particularly interested in fundamentally strong companies expected to post healthy financial results.

Analysts said the market continues to hold underlying optimism following the recent election outcome, with many investors expecting a broader positive trend in the coming months. However, ongoing geopolitical tensions and macroeconomic uncertainties have slowed the pace of recovery.

They added that despite improvements in turnover and market indices, investors are still maintaining a cautious stance due to concerns over inflation, interest rates and the overall global economic environment.

According to BRAC EPL Stock Brokerage's weekly market commentary, the market traded for five sessions during the week with mixed performance before ending positively. The market declined by 0.18% on Sunday and by another 0.29% on Monday. However, investor confidence improved from Tuesday onward, with the market gaining 0.48% on Tuesday and 0.78% on Wednesday before ending the week on a positive note on Thursday.

Sector-wise performance remained mixed among financial stocks. The General Insurance sector posted the highest gain of 5.82%, followed by Life Insurance with 3.51% and the Banking sector with 0.48%. On the other hand, the Mutual Fund sector suffered the highest loss of 1.86%, while the NBFI sector declined by 0.10%.

Among large-cap non-financial sectors, Fuel and Power led the gains with a 1.38% increase, followed by Telecommunication at 1.09%, Food & Allied at 0.96% and Pharmaceutical at 0.37%. Meanwhile, the Engineering sector edged down by 0.09%.

EBL Securities, in its weekly commentary, noted that the market displayed resilience throughout the week due to active participation from both buyers and sellers. The brokerage house also observed that improved sentiment surrounding Middle East ceasefire talks and selective buying in December-closing stocks contributed to the market's rebound.

Market observers believe that upcoming corporate earnings announcements, policy decisions, and developments in the global geopolitical landscape will continue to influence investors' sentiment and determine the market's direction in the coming weeks.