Small-cap stocks on fire, main market sluggish
When most of the blue-chip stocks were hibernating at the floor prices for months and average mid-cap stocks were facing volatility, the small companies listed with the SME board of the Dhaka Stock Exchange (DSE) started to fly freely.
DSMEX, the equity index for small-cap companies' platform of the premier bourse, closed 7.55% higher on Wednesday as all the 16 scrips were on fire. Most of them hit the upper circuit — the maximum limit for price hike for a day.
Al-Madina Pharmaceuticals Limited led with 10% gains while Krishibid Seed Limited were at the bottom of the table with 5.64% gains.
Turnover in the DSE SME board jumped to Tk56 crore, from Tk21 crore.
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The market caught a small-cap bias, said stockbrokers, adding that not only the SME board, the main board of the DSE also was dominated by small-cap gainers as investors believed small companies become trendy during volatilities due to the less fund requirement to move their prices.
"It seems the big boys were not counting on the small investors' participation anymore," said a brokerage official at Motijheel, Dhaka after the trading hour.
The small capital platform stocks had a crazy bull run that pushed many SME stocks manifolds higher in the first seven-eight months of 2022 after the regulator lowered the minimum investment size threshold to Tk20 lakh from the initial size of Tk50 lakh upon request from the bourse.
Later a small investor, seeking equal opportunity, filed a writ petition against the minimum investment threshold and failed to win the legal battle. Meanwhile, SME stocks drastically dropped that dragged DSMEX down to below the 1,000 point mark earlier this year from near 2,000 in less than a year.
However, since the middle of May the index has rebounded.
"Many of the large investors now are okay without the retail participation to look for capital gains at SME stocks while the blue chip ones are mostly in hibernation at the floor prices," said the stockbrokers.
DSEX, the broad-based index of the capital city bourse, was 0.14% up to 6,336 on Wednesday as it was trying to recover Monday's loss. 92 of the main-board scrips advanced, 91 declined.
