Stocks edge up as investors turn to blue-chips

Infographics: TBS

The indices of the Dhaka Stock Exchange (DSE) extended their recovery for a second consecutive session today (21 May), as cautious investors showed renewed interest in blue-chip and promising undervalued stocks despite lingering market uncertainties. 

The benchmark DSEX index edged up by 6 points to close at 4,801, bringing the two-day total gain to 25 points. The DSE Shariah Index (DSES) rose by 3 points to 1,050, while the blue-chip DS30 index gained 2 points to settle at 1,782.

Turnover on the DSE increased by 9.6% to Tk326 crore, compared to Tk298 crore in the previous session. Of the 397 issues traded, 227 advanced, 98 declined, and 72 remained unchanged.

Despite the modest recovery, market insiders remain concerned as investor sentiment continues to weaken. They argue that while the government intends to ensure a healthy, stable and vibrant capital market, the current BSEC leadership is failing to restore investor confidence. 

According to them, the chairman, though an experienced banker, lacks the capital market expertise needed to tackle complex challenges, leaving key issues unresolved.

As a result, long-term and reputable investors have largely exited the market, leaving it dominated by short-term traders and, at times, manipulators. Recent regulatory actions against manipulation have further reduced market activity, with both primary and secondary markets showing low participation.

Adding to the pressure, rising gas prices are expected to increase production costs, affecting corporate earnings. Institutional activity remains subdued, while retail investors continue to exit, worsening the overall market outlook.

EBL Securities, in its weekly market commentary, noted that the benchmark index of the Dhaka bourse managed to stay afloat for the second consecutive session as opportunistic investors continued to seize bargain hunting opportunities in the beaten down scrips following the market's prolonged downturn. 

However, a cautious selling approach persisted as jittery investors continued to capitalise on opportunities to liquidate their holdings in the volatile market. 

Moreover, mutual fund scrips dominated the top gainers' list, driven by buying interest from short term profit-seeking investors following the recent amendment proposal to mutual fund rules by the Capital Market Reform Task Force, according to the market commentary.

Meanwhile, the Chittagong Stock Exchange (CSE) also ended in the green. The CSCX gained 16.8 points, while the CASPI rose by 29.6 points.