DSEX hits 6-week high riding on relaxed margin rules, better earnings

Infographic: TBS

Extending the pre-Eid upward momentum, stocks soared faster on Monday as the investors were counting on corporate earnings recovery and a positive impact of the recent margin loan relaxation. 

Opening the post-holiday trading higher, DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), closed 0.38% higher at 6,252 – highest since 9 March.

Also, thanks to a number of blue-chip stocks that saw increased demand as the DS30 index gained 0.46% to close at 2,213. 

"The Dhaka bourse witnessed a positive start to the first session after the Eid holiday, as investors' buying appetites were restored based on corporate earnings recovery in the latest quarter," wrote EBL Securities in its daily market commentary. 

A dominant buying trend was observed in sector-specific stocks that either reported or are expected to report improved financial results, it added. 

The Bangladesh Securities and Exchange Commission (BSEC), on the last working day before the Eid-ul-Fitr holidays, said shares of the companies having at least Tk50 crore in paid-up capital, and three consecutive years in 'A' category in the bourses would be marginable up to the price to earnings ratio of 50, up from 40. 

Only a handful of stocks got the instant benefits of the decision on Monday when the new rule came into effect, said stockbrokers. 

However, it did help boost investors' confidence about a robust fund flow into the aforesaid stocks, and Monday's market reflected it. 

87 scrips advanced in the DSE, while 38 declined. 

Also, the market that saw trading sessions slashed by an hour during Ramadan, returned to full trading hours on Monday. 

However, turnover in the DSE came down by 1.1% to Tk553 crore as many investors were yet to rejoin after the holidays, while many reactive ones were watchful of how the market would react to the ongoing developments. 

On the sectoral front, travel and leisure, IT and food contributed the highest 18.6%, 16.6% and 14.3% of the DSE turnover, respectively. 

Jute, travel and cement sectors led the gainers, while no sector faced capital erosion.