Stocks bounce back again after heavy sell-offs

Infographic: TBS

After experiencing a sharp jolt amid escalating conflict between neighbouring India and Pakistan, stocks bounced back yesterday, driven by increased buying spree.

As a result, 377 or 95% of the stocks on the Dhaka Stock Exchange (DSE) surged, with 19 stocks hit upper circuit or single day circuit breaker. 

DSEX benchmark index recovered 100 points as investors focused on the buying side, according to market insiders.

Islami Bank Bangladesh, Walton, Al-Arafah Islami Bank, and Beximco Pharmaceuticals contributed the most to the index's rise, according to EBL Securities.

Although the market gained positive momentum, investor participation — particularly among large investors — remained stagnant, which caused stock turnover to decline by 29% to Tk366 crore.

Market capitalisation, a measure of a company's total value based on its outstanding shares, recovered Tk8,105 crore to Tk6.52 lakh crore yesterday.

In the previous trading session, the capitalisation dropped Tk10,066 crore, according to the DSE data.

However, the major equity index of the DSE on Wednesday fell by 3%, the sharpest in more than 49 months.

With only nine gainers against 385 losers, the broad-based index of the Dhaka bourse closed 149 points lower at 4,802, the lowest since 23 November 2020.

Saiful Islam, president of the DSE Brokers Association (DBA), told The Business Standard, "Due to fears of a potential India-Pakistan war, capital market investors panicked, which led to heavy sell-offs on Wednesday. After the panic-driven sell-off, stocks recovered yesterday.

"In our capital market, retail-level investors dominate to a large extent. As a result, many inexperienced investors panic easily, and the sell-off accelerates rapidly. Investors should make decisions based on fundamental factors that genuinely impact the market."

When asked about investor participation, he said the lower turnover indicates that participation remained weak and there was no substantial support in the market either.

EBL Securities in its daily market commentary said that Dhaka stocks managed to rebound from the previous session's steep decline as easing investor woes helped to somewhat offset the earlier overreaction to recent geopolitical tensions in neighbouring countries, although market participation remained sluggish as cautious investors opted to monitor the market's trend. 

"The indices trended upward throughout the session, as the swift market rebound from the previous day's free fall led most stocks to close in positive territory," it added.

"However, trading activities remained stagnant with wary investors taking a watchful stance ahead of the chief adviser's meeting with the capital market stakeholders, it read. 

Meanwhile, Chief Adviser Muhammad Yunus called a meeting scheduled for Sunday with the finance adviser, special assistant for finance, secretary of the Financial Institutions Division and the chairman of the Bangladesh Securities and Exchange Commission for developing and strengthening the capital market.

On the sectoral front, Bank stocks exerted the highest by 23.8% in the total turnover, followed by Food by 13.0% and Mutual Fund by 12.0%.

All the sectors showed positive returns, out of which Mutual Fund by 6.1%, Paper 4.5% and Ceramic 4.4% exhibited the most gains on the bourse. 

Khulna Printing and Packaging topped the gainer chart with 10% increase in its share prices to Tk18.7 each, followed by Far Chemical Industries with 9.94% to Tk21 each, Khulna Power 9.90% to Tk11.1 each, NRBC Bank 9.85% to Tk7.8 each, and KDS Accessories 9.80% to Tk45.9 each. 

While Meghna Condensed Milk topped the loser list as its shares price declined by 5.90% to Tk20.7 each, followed by Social Islami Bank by 2.41% to Tk8.1 each, and Progressive Life Insurance by 2.22% to Tk52.7 each.

The port city bourse, Chittagong Stock Exchange (CSE), also settled on positive zone. 

The Selective Categories' Index (CSCX) and All Share Price Index (CASPI) rose by 61.0 points and 113.7 points, respectively.