Non-operational, loss-making firms defy market gloom to top gainers list

Amid a significant downturn in the capital market, where fundamentally strong stocks faced steep corrections, non-operational and loss-making companies surprisingly dominated the gainers' chart at the Dhaka Stock Exchange (DSE) last week.

This unusual rally of low-cap and junk stocks comes as the benchmark index suffered a sharp decline, indicating a surge in speculative activity rather than investment driven by actual business performance, according to market insiders.

Zeal Bangla Sugar Mills, a Z-category company with halted operations and historical losses, topped the weekly gainers' list with a staggering 60.32% return, closing at Tk132.10. It was followed by Bd Thai Food, a B-category firm, which rallied 57.55% to close at Tk16.70.

The list of top performers was almost entirely populated by companies with weak fundamentals. Bd Thai Aluminium rose 24.04%, while Standard Ceramic, another Z-category stock, jumped 17.66%.

Other struggling companies such as Khulna Printing and Packaging, BD Welding, and Tallu Spinning also made it into the top ten gainers. Data shows that most of these companies have no price-to-earnings ratio available due to continuous losses, yet they attracted massive buyer interest while blue-chip stocks fell.

In stark contrast to the rally of these weak companies, overall market sentiment remained grim. The benchmark index DSEX plunged 141 points, or 2.82%, to settle at 4,886, falling below the psychological 4,900 mark. The blue-chip DS30 index also shed 42 points, or 2.20%, to close at 1,891.

The bearish sentiment was widespread, with 325 issues declining against only 45 advancing, while 13 remained unchanged. Market participation also waned, with daily average turnover slipping 22% to Tk411 crore, while total market capitalisation eroded by Tk7,400 crore in a single week.

EBL Securities, in its weekly market review, observed that the bourse failed to sustain the recovery momentum of the prior two weeks. The brokerage noted that investor confidence was weighed down by concerns over political uncertainties and ongoing financial sector restructuring, prompting a cautious stance among market participants.

The week began with predominant selling pressure as investors remained on the sidelines, waiting for clearer signals on the country's political front. Although bargain hunters attempted a mid-week recovery, the momentum faded due to the absence of major positive triggers, EBL Securities noted.

All major sectors posted negative returns, with the services sector taking the biggest hit at 9.1%, followed by non-bank financial institutions and life insurance.

While junk stocks rallied, the financial sector faced severe corrections. Non-bank financial institutions (NBFIs) led the weekly losers' chart, driven by growing fears over liquidation risks.

International Leasing crashed 40%, followed closely by Fareast Finance and Premier Leasing, which lost 39% and 38% respectively, as investors scrambled to exit positions amid intensifying regulatory concerns.

In terms of trading activity, investors were mostly focused on the textile sector, which contributed 15% to total turnover, followed by the engineering and pharmaceuticals sectors.