Z-stocks shine while fundamental shares slip

Infographic: TBS

While fundamentally sound stocks - known for regular profits and consistent dividend payouts - faced sharp price declines, weak or junk stocks dominated the gainers' list at the Dhaka bourse, posting substantial value increases. 

In the week from 12 to 16 January, 60% or six of the top ten gainers were Z-category stocks, according to the Dhaka Stock Exchange's (DSE) weekly report.

Notably, no A-category firms - those typically paying at least a 10% dividend - made it to the list. Meanwhile, three B-category stocks and one newly listed N-category firm joined the gainers' circle.

Khulna Printing and Packaging (KPPL), a loss-making firm for five consecutive years and unable to pay any dividend since the 2019-20 fiscal year, topped the gainers' list as its share price surged by 28.57%, rising from Tk13.30 to Tk17.10 each over the past week.

Other Z-category stocks such as Central Pharmaceuticals, Alltex Industries, Yeakin Polymer, New Line Clothings, and Dhaka Dyeing saw price increases between 11% and 17%.

The broader market experienced significant losses last week as investor sentiment remained subdued, leading to a sell-off. For five consecutive trading sessions, the DSE's major indices closed in the red, with most stock prices declining.

The DSEX, the benchmark index, fell by 1.16% or 60.51 points to settle at 5,133. The DS30, which tracks blue-chip stocks, declined by 1.56% (30 points) to 1,894, while the DSE Shariah Index dropped 0.97% (11 points) to close at 1,150.

Major contributors to the DSEX decline included Islami Bank Bangladesh, which dragged the index down by 18.8 points, followed by Renata (9.7 points) and BRAC Bank (5.2 points), according to EBL Securities.

Total weekly turnover rose by 9.08% to Tk1,890 crore, with the average daily turnover increasing to Tk378 crore from Tk346 crore in the previous week. 

During the week, 396 stocks were traded, with 109 advancing, 263 (66%) declining, 24 remaining unchanged, and 17 seeing no trading activity.

EBL Securities, in its weekly market commentary, said the capital market had a dismal week, with the benchmark index continuing its losing streak. 

Investor sentiment remained shaky due to fears of impending inflationary pressure following recent tax hikes, it said. 

Besides, concerns over the impact of stricter loan classification rules in the banking sector, set to take effect next quarter, further dampened the market outlook.

It further said indices remained downbeat throughout the week, despite bargain hunters showing interest in certain scrips in anticipation of short-term gains as most investors preferred to remain cautious.

This was driven by forthcoming earnings declarations for the recently ended quarter and the announcement of the monetary policy statement for the second half of the fiscal year, reads the commentary.

Investors were mostly active in the pharmaceuticals sector last week, contributing the highest 15.3% in the total turnover, followed by the bank sector 11.8% and the engineering sector 11.5%.

Most of the sectors ended in red with the financial institutions sector by 3.7% being the biggest loser.