DSE rally stalls as investors cash in gains

The Dhaka Stock Exchange (DSE) broke its three-session winning streak today (3 September) as investors locked in profits after the recent rally, though selective buying in large-cap stocks kept the market's losses in check.

The DSEX, the benchmark index, slipped 1.67 points to close at 5,662.09. It had jumped 23 points on Wednesday following a 39-point surge on 1 September.

The market started on a positive note and stayed in the green until mid-session. But selling intensified later in the day as investors moved to pocket gains amid doubts over the durability of the recovery.

"Lack of strong conviction among investors over the market's trajectory prompted quick profit-taking that constrained the market's extended recovery potential," EBL Securities said in its daily market commentary.

The market opened higher and the indices remained in positive territory until mid-session. However, selling pressure intensified in the latter part of trading as investors preferred to realise their recent gains amid concerns over the sustainability of the market's recovery.

"Lack of strong conviction among investors over the market's trajectory prompted quick profit-taking that constrained the market's extended recovery potential," EBL Securities said in its daily market commentary.

According to the brokerage, despite an optimistic opening, the market observed a pullback as selling pressure gradually intensified in the late hours, with investors opting to realise gains amid concerns over the market's momentum.

Turnover stood at Tk721 crore today, down 1.4% from Tk731 crore in the previous session. Although trading activity remained relatively strong, the decline in turnover alongside weak market breadth indicated that investors were becoming more selective.

Textile stocks dominated the day's trading, accounting for 33% of total turnover. General insurance followed with 16.7%, while pharmaceuticals contributed 12.4%.

Market breadth was weak, with 225 issues declining against 125 gainers, while 45 remained unchanged out of 395 securities traded.

However, the blue-chip DS30 index gained 0.71%, indicating selective buying interest in large-cap stocks. The Shariah-based DSES index declined during the session.

Sectoral performance was mixed. Cement posted the highest gain of 1.8%, followed by life insurance at 1.7% and IT at 1%.

On the losing side, textile stocks fell 2.4%, while mutual funds and services declined 1.4% and 1.1%, respectively.

The recent recovery has largely been driven by bargain hunting in beaten-down stocks and expectations of regulatory reforms. However, investors remain cautious amid concerns over the domestic business environment, energy shortages and the weak earnings outlook of listed companies.

Market participants said the relatively strong turnover indicates renewed trading activity, but the market still lacks broad-based buying momentum. Investors are taking positions selectively rather than making aggressive bets across the market.

The DSEX remains well below the 5,900-point level seen around the beginning of August, highlighting the extent of the market's recent correction.

Meanwhile, the Chittagong Stock Exchange also ended lower. Its Selective Categories' Index (CSCX) fell 4.7 points, while the All Share Price Index (CASPI) declined 14 points.

The market's near-term direction will depend on whether bargain hunters can sustain buying interest and absorb profit-taking pressure. Regulatory developments and corporate earnings prospects are also expected to remain key catalysts for investors.