Fundamentally weak stocks dominate weekly gainers' chart as market rebounds
Zeal Bangla Sugar Mills, a Z-category state-run firm, emerged as the week's top performer
The Dhaka Stock Exchange (DSE) witnessed a return to green territory last week, driven by investor optimism over potential political stability as the schedule for the general election was announced.
However, the recovery was characterised by a distinct anomaly: the gainers' chart was overwhelmingly dominated by fundamentally weak and Z-category companies rather than performing blue-chip stocks.
While the benchmark index rose, speculative investment behaviour pushed struggling firms with a history of losses and halted operations to the top of the price appreciation list.
Zeal Bangla Sugar Mills, a Z-category state-run firm, emerged as the week's top performer. Despite having no price-to-earnings (P/E) ratio available due to consistent losses, its stock price surged by 29.90% to close at Tk171.60. It was closely followed by Regent Textile, another Z-category stock, which rallied 29.17% to close at Tk3.10.
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The trend of "junk stocks" outperforming the market was evident throughout the top ten list. Northern Jute, HR Textile, First Finance, and Usmania Glass — all belonging to the Z category — posted significant gains ranging from 19% to 24%.
Even among the better-performing categories, signs of overvaluation were present. For instance, Sonargaon Textile, a B-category company, secured the third spot with a 25.78% gain, trading at an alarming P/E ratio of 1,610.
Despite this speculative frenzy in low-cap and weak stocks, the broader market indices managed to snap a losing streak. The benchmark DSEX index rose by 77 points, or 1.58%, to settle at 4,963. The blue-chip index DS30, which comprises the best-performing companies, also gained 11 points to close at 1,903.
Market participation saw a marginal improvement, with the daily average turnover increasing by 1.49% to stand at Tk417 crore. The overall market capitalisation rose by Tk1,600 crore, reaching Tk6.86 lakh crore.
EBL Securities, in its weekly market review, noted that the capital bourse reverted to its recovery momentum following the previous week's pullback. The brokerage house explained that investors' optimism regarding evolving political developments offered some relief to the broadly subdued market sentiment. Although the week began on a weak footing, carrying over downbeat pressure, the market found a cushion as anticipation regarding the tentative declaration of the national election schedule encouraged opportunistic investors to accumulate shares.
In terms of sector-wise participation, investors were most active in the pharmaceuticals sector, which accounted for 15% of total turnover, followed by the textile and engineering sectors.
Most sectors posted positive returns, with the life insurance sector registering the highest gain of 7.4%. Conversely, the telecommunication sector was the sole loser, declining by 2.6%.
On the turnover board, Orion Infusion, Simtex Industries, and Dominage Steel were among the most traded stocks.
However, not all companies shared in the week's good fortunes. Meghna Petroleum led the losers' chart, shedding 10.28%, followed by non-bank financial institutions like FAS Finance and Prime Finance, which also faced significant selling pressure.
