Monetary policy makes no impact on stocks

Stock prices inched up as investors did not immediately react to the monetary policy declared on Wednesday for fiscal 2019-20. 

Investors were in a ‘wait and see’ mood to pick good stocks at a bargain following a sharp fall over the month of July, said Rahat-Ul-Amin, an equity analyst at Prime Bank Investment Ltd, a merchant bank. 

The monetary policy statement (MPS), published by Bangladesh Bank, reflects most of the macro-economic realities, the analyst said. 

However, he said, as stock market professionals they are in an additional effort to evaluate the money market scenario to understand whether the liquidity situation is enough to increase cash flow to stocks and boost the spirit of investors in the coming days. 

The central bank in MPS has expressed its cautious optimism about the economic fundamentals and money market situation that leads to no significant change in policy measures.  

Stock indices at both the bourses of the country witnessed a nosedive in early trading in July but gradually it recovered through several ups and downs as investors continued bargain hunting, especially following earnings scenario being disclosed over the week. 

At the end of session, DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), closed at 5138, up 13.77 points from the previous close, a 0.27 percent gain on Wednesday. 

The stock market had been in a free fall since June 16 until July 22 that pushed the DSEX below 4925 points from 5470. Analysts attributed blame for the fall to issues like- profitability and liquidity outlooks, People’s Leasing liquidation attempt and Coppertech listing controversy, among others. 

Later regulators resorted to verbal orders to direct financial entities to buy stocks at decreasing rates, so that further fall can be avoided. This attempt successfully helped increase the demand in the stock market. Within seven working days of July 22, DSEX had recovered to 5138 points. 

However, in this situation, the market is neither looking to go up nor down, and it has been difficult for analysts to make any forecast. 

DS30, the blue-chip index of the premier bourse, closed at 1827.91 points, a 0.05 percent gain over the session, as of Wednesday. 

DSES, consisting of all the Shariah-compliant securities listed with DSE, added the most on Wednesday, with a 0.34 percent of gain. 

Overall participation increased a bit that led the market turnover to Tk447 crore, 4.17 percent up from the previous session. 

At the Chittagong Stock Exchange (CSE), broad index CSCX gained 0.35 percent to close at 9559.31. Selected companies’ indices saw a higher gain in percentage scale.

Even though the trading volume in CSE was down. 

Sectoral charts reveal, telecom, banking, non-bank financial institutions, ceramics, life insurance, jute, miscellaneous and pharma led the gains, while mutual fund and general insurance suffered a sharp correction following a gain over weeks.