Dhaka stocks snap eight-day rally

The benchmark DSEX index of the Dhaka Stock Exchange (DSE) ended its eight-session winning streak today, as investors opted to book profits and earnings disclosures from several blue-chip companies dampened market sentiment.

The key index dipped by 37 points, settling at 5,355. Blue-chip stocks were particularly hit, with the DS30 index falling 32 points to 2,058. Concurrently, the shariah index slipped 8 points, closing at 1,165.

Turnover saw a 9.14% decline, reaching Tk865 crore compared to Tk952 crore in the preceding session. Out of 398 traded issues, 117 advanced, 232 declined, and 50 remained unchanged.

Market insiders have largely attributed this dip to a natural correction, with cautious investors capitalising on the opportunity to secure gains. Despite the pullback, overall market indicators are viewed as remaining positive for the equity market.

Analysts highlight that the recent market rally has been fuelled by a renewed appetite for large-cap stocks and an improved macroeconomic sentiment. Liquidity is gradually enhancing, and institutional participation is gaining momentum, particularly in the banking and telecom sectors, according to a senior analyst at a leading brokerage house.

With the DSEX regaining strength, market watchers are now closely observing whether the benchmark can maintain its upward trajectory and retest the year's high in the coming sessions.

Akramul Alam, head of Research at Royal Capital, told TBS that the stock market's ongoing uptrend is likely to extend for several more sessions, though some profit-taking is only natural after last week's rally.

He explained that this correction reflects investors locking in gains rather than a sign of weakening momentum.

Alam identified the declining yield on government securities as a major factor supporting the market, noting it is expected to fall further. "With stock market returns currently around 10.30%, lower government bond yields will make equities even more attractive to investors."

He also pointed to several macro-level drivers that have strengthened investor confidence. Concerns over Bangladesh's foreign exchange reserves have eased with the rise in foreign exchange reserves. The government's plan to merge weak banks has further reassured investors.

Alam added that political uncertainty ahead of the upcoming national election has diminished, lifting a significant overhang on the market. He also noted that many listed companies – especially those with a June-ending fiscal year – remain undervalued, attracting fresh interest from buyers.

EBL Securities, in its daily market review, said the rallying index of the capital bourse lost traction after eight consecutive sessions of gains, as investors opted to book profits following a broad-based appreciation in stock prices.

"The market opened on a positive note, with buying interest fuelled by lingering optimism. However, the initial momentum faded as a late-session selling spree, driven by portfolio rebalancing and disappointing earnings disclosures from large-cap stocks, weighed on the index, dragging it into negative territory," states EBL Securities. 

Some blue-chip stocks sharply dragged down the DS30 index today. The stocks included British American Tobacco Bangladesh Company (around 16 points), BRAC Bank (4 points), and LafargeHolcim Bangladesh (3 points). Additionally, Berger Paints Bangladesh, Walton Hi-Tech Industries, Square Pharmaceuticals, Investment Corporation of Bangladesh, Power Grid Company of Bangladesh, United Power Generation & Distribution Company, and Prime Bank also contributed to the decline.

On the sectoral front, bank stocks accounted for the highest share of turnover at 24.0%, followed by general insurance at 11.7% and food at 10.8%. Most sectors ended in the red, with food (-4.7%), cement (-3.7%), and ceramic (-2.4%) posting the sharpest corrections on the bourse.

The port city bourse, the Chittagong Stock Exchange (CSE), also experienced a profit-booking session. Its Selective Categories' Index (CSCX) dropped 32.4 points, while the All Share Price Index (CASPI) fell 49.6 points.