Stocks stay afloat amid a 9-month low turnover

Infographic: TBS

Dhaka stocks, hitting a nearly five year low on Thursday, partially recovered in a special session today (17 May). 

Absorbing the initial selloff, bargain hunters entered the scene to bag some beaten down stocks that started pulling up DSEX, the broad-based index of the Dhaka Stock Exchange (DSE) to above the psychological mark of 4,800. 

Finally, DSEX recovered 39.4 points or 0.8% to settle at 4,820 – yet to be treated as a strong recovery after a 55 points fall in the previous session. 

Moreover, due to a clear lack of trading appetite daily turnover in the premier bourse shrunk to a 9-month low of Tk263 crore. 

Analysts treated the situation as a mere hold to the free fall prevailing for the past five weeks. 

"The benchmark index of the capital bourse put a hold on the free fall amid subdued trading activity as investors preferred to engage in bargain hunting following substantial price corrections due to the market's prolonged downturn," EBL Securities wrote in its daily market commentary. 

Stock market, banks and the government service offices were open on a Saturday after two decades as the government decided the nation should work on two Saturdays before going for longer holidays during the upcoming Eid-ul-Azha festival.

"The indices mostly remained in the positive zone as some opportunistic investors deemed the beaten down scrips at attractive price levels, prompting renewed positioning that somewhat helped to put a cushion to the market's ailing momentum," EBL Securities said.

DSEX was trying to consolidate at a narrow range around 5,200 levels until 10 April when a fresh selloff triggered amid the global trade volatility, later aggravated by geopolitical tensions in the region.

Meanwhile, the Bangladesh Bank opted for a further market based exchange rate mechanism for foreign currency loans from the International Monetary Fund.

Despite the Bangladesh Bank optimism for a stable currency, investors started to analyse and forecast the exchange rate for the coming months.

"When the market confidence is weak, investors react more negatively to protect their capital and Bangladesh's stock market is going through such a phase right now," Investit Asset Management Managing Director and CEO Mohammad Emran Hasan told The Business Standard.

The downward spiral in the stock market needs a trigger for a halt and possibly a turnaround, he said, adding, shares of many outperforming companies are trading cheaper that should attract long term investors.

However, the nervousness amid a fear of further capital erosion intensified on Thursday when the market barely observed bargain hunters' confidence following a slump below the recent psychological thresholds, being it for the indices or about many of the blue chip stocks.

Emran Hasan said the turnaround trigger might be good news about the economic growth and stability for the coming years, it might be policy support to the businesses and the capital market or listing of quality stocks.

On the sectoral front, banking stocks dominated the turnover table with nearly 22% contribution to the daily turnover on the DSE on Saturday. Food, mutual funds followed with over 11% turnover contribution each.

All the sectors other than food and telecom ended in green, out of which tannery, services and IT exhibited the highest strengths with up to 4.6% increase in their market capitalisation.

Out of the 397 issues traded, 277 advanced, 78 declined and 43 remained unchanged. 

The Chittagong Stock Exchange also managed to stay afloat in the green territory while turnover in the port city bourse fell by 10.7% to Tk9.2 crore on Saturday.