Rate cut fuels early surge, but profit-taking caps DSE gains

The country's premier bourse witnessed a significant surge in liquidity today (2 August) as investors reacted to the central bank's first policy rate cut in nearly two years.

Market turnover on the Dhaka Stock Exchange jumped by 21% to reach Tk1,257 crore, compared to the previous week's average, as participants initially cheered the shift towards monetary easing.

However, despite the liquidity injection and a strong start that saw the benchmark index scale an intraday high of 5,938 points, the market failed to sustain its momentum. 

Broad-based profit-taking in the final hour of trading, coupled with persistent concerns over domestic industrial challenges and geopolitical jitters, dragged the index back to close on a largely flat note, according to the market insiders.

The benchmark DSEX index ended the day at 5,895 points, while the blue-chip DS30 index managed a marginal gain of 3 points to settle at 2,213. 

Market breadth remained positive as 193 issues advanced, 149 declined, and 45 remained unchanged.

According to the daily market review by EBL Securities, the benchmark index remained afloat throughout most of the session but lacked the necessary buying conviction to consolidate above the psychological 5,900-point threshold. 

The brokerage noted that even the long-awaited policy rate cut could not fully offset investor anxiety regarding domestic energy supply disruptions and the evolving situation in the Middle East. Heavyweight scrips faced intensified selling pressure towards the close, which eroded the morning's substantial gains.

Sheltech Brokerage Limited highlighted that the market's performance was primarily shaped by an early buying frenzy followed by gradual distribution. The brokerage pointed out that while the central bank's move to ease interest rates provided a temporary lift, the ongoing gas supply crisis and uncertainty surrounding proposed margin lending rule amendments prompted many investors to lock in profits after the early peak.

On the sectoral front, the textile sector dominated market activity, accounting for 21.4% of the day's total turnover, followed by general insurance and pharmaceuticals, both contributing 11.9%. 

In terms of returns, mutual funds emerged as the top-performing sector with a 5.6% gain, followed by jute and services. Conversely, the cement, life insurance, and banking sectors faced corrections, with several large-cap lenders acting as primary index draggers, including Islami Bank Bangladesh, Al-Arafah Islami Bank, and National Bank.

Individual stock performance was highlighted by Green Delta Mutual Fund, which hit the 10% upper circuit limit. Other top gainers included Usmania Glass, Prime Insurance, and Queen South Textile. 

On the flip side, S Alam Cold Rolled Steels was the top loser, shedding 7.85% of its value, followed by BIFC and Sena Insurance.

The positive sentiment was partially mirrored at the Chittagong Stock Exchange, where the broad CASPI index rose by 33 points to reach 15,794. However, the port city bourse saw a sharp 79% decline in trading volume, with turnover settling at a mere Tk9.82 crore.