Stocks close higher amid fiscal optimism

Beating the intraday volatility, Dhaka and Chattogram stocks closed higher on Sunday amid an increased appetite for oversold stocks which are showing some earnings improvement or potential.

Brokerage professionals said a number of factors helped the market behave strongly on Sunday, while an increasing expectation for market-friendly measures in the upcoming budget played the biggest role to boost investors' confidence.

Trading continued with the prevailing volatility until the middle of the session, but stood firm while closing.

"Late hour buying binge with increased participation of the investors helped the indices to end in green position," said EBL Securities in its daily market commentary.

DSEX, the broad based index of the Dhaka Stock Exchange (DSE) rose by 26.25 points or 0.4% to 6,669 points on Sunday, while 216 scrips advanced, 112 declined and 52 remained unchanged.

Kazi Ahsan Habib, chief business officer at Prime Bank Securities believes investors' expectation for capital market-friendly policies in the upcoming national budget has been the key factor that helped boost investors' confidence on Sunday.

"The Securities Regulator proposed some real fiscal measures that may help develop the capital market and I observed that many institutional and high net worth individual investors are optimistic that the government would respond positively," he added.   

Professor Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC) told The Business Standard, "The capital market needs a number of supportive measures in national budget to be a developed one and we proposed those to the Ministry of Finance."

Declining to share particulars of the BSEC proposals, he said utilizing the undisclosed money of wealthy people for the market development, facilitation and popularizing the bond market and very importantly incentivizing the listing of blue-chip companies are at the top of the goals of the proposals his office made.

Ministry sources said the proposals include offering more corporate tax cuts for sharing more of the business fortunes with the public that hints lower corporate taxes after going public with more free-float shares.

However, the market also got back a good extent of its vibrancy on Sunday after the number of investors on the trading floor surged as most investors returned to Dhaka after the Eid break.

DSE turnover rose by 107% to Tk972 crore on Sunday, which was the highest in a month.

"Meanwhile, followed by earnings declarations the optimistic investors exhibited their buying binge on sector-specific stocks that met their expectations," wrote EBL Securities.

On the sectoral front, Engineering, miscellaneous and textile stocks contributed most to the daily turnover in the DSE.

Most of the sectors displayed satisfactory performance, out of which services and real estate topped with 5.7% gain in the sectoral market capitalization, followed by ceramic that gained 4.9% and IT which gained by 3.1%.

General insurance, travel and leisure and tannery sectors went through some minor corrections on Sunday.

Amid the buying spree in oversold mid cap stocks, blue chip stocks face some mild price corrections and DS30, the blue-chip index of the Dhaka Stock Exchange  closed 0.18% lower.

Broad based indices in the Chittagong Stock Exchange (CSE) also closed higher, while turnover in the port-city bourse more than doubled to nearly Tk32 crore.