Stock recovery continues amid large-cap momentum

The indices of the Dhaka Stock Exchange (DSE) rose for four consecutive trading sessions as cautious investors demonstrated their appetite for undervalued, blue-chip stocks.

The prime index DSEX of the bourse rose 83 points, settling at 5,244. Meanwhile, the blue-chip index DS30 was up by 31 points to 1,875, and the Shariah-compliant stocks' index DSES increased by 25 points to 1,146.

The turnover jumped by 84% to Tk453 crore from Tk246 crore compared to the previous session.

Stockbrokers said that the anticipation of a rationalised proposal for capital gains tax on individual stock investors in the final budget and a concessional large salvage fund for the state-owned Investment Corporation of Bangladesh (ICB) encouraged bargain hunters to make new investments.

Recent developments between the Bangladesh Bank and ICB also raised hopes for a market support fund, contributing to cautious optimism in the secondary market.

According to ICB sources, the central bank has already instructed ICB to secure a guarantee from the finance ministry. This guarantee will allow ICB to access a large fund from the Bangladesh Bank, which will help solve its liquidity problems and enable it to invest part of the fund into undervalued shares.

Following advice from the finance ministry in May, ICB, the largest de facto market maker in Bangladesh, requested Tk5,000 crore as a soft loan from the central bank.

On the day, 73% of stocks traded at the bourse witnessed a price increase as investors concentrated on buying shares. Among the traded scrips, 288 advanced, 55 declined, and 50 remained unchanged during the trading session.

On Thursday, turnover at the DSE stood at Tk452.94 crore, which is 84% higher than the previous trading session.

Linde Bangladesh topped the gainer list with a gain of 43% to Tk1409 each, as there was no circuit breaker owing to its interim dividend declaration. It was followed by Hami Industries with a gain of 9.94% to Tk151.4 each and Paper Processing and Packaging with a gain of 9.09% to Tk123.5 each.

Global Heavy Chemicals was on the top loser list as its share price declined by 2.99% to Tk38.9 each, followed by National Tea with a decline of 2.98% to Tk377 each, and AFC Agro with a decline of 2.96% to Tk13.1 each.

In the first trading session after the Eid vacation, DSEX increased by 43 points amid a low turnover of Tk246 crore on Wednesday. 

EBL Securities wrote in its daily market commentary that the capital bourse of the country logged back-to-back positive sessions, aided by the price appreciation of large-cap stocks as bargain hunters maintained their control across the trading floor and collected blue-chip companies' shares deemed to be trading at lucrative price levels.

According to the commentary, the market has somewhat recovered from its intense bearish spell, with optimistic investors shifting the market pulse towards buyer dominance by capitalising on oversold issues since the market has undergone prolonged corrections. 

However, cautious investors are still observant in the absence of a major trigger for the market to return to persistent positive momentum.

On the sectoral front, food issues exerted the highest turnover at 20.0%, followed by pharma at 16.7% and textiles at 8.8%. All sectors displayed positive returns, with jute at 7.0%, engineering at 5.2%, and paper at 4.6% exhibiting the most positive returns on the bourse today.

The port city bourse, CSE, also settled on green terrain. The selected indices (CSCX) and All Share Price Index (CASPI) rose by 113.3 and 178.4 points, respectively.