Stocks continue strong momentum as turnover rebounds

Infographic: TBS

Stocks continued recovery in both Dhaka and Chattogram stock exchanges for the fifth consecutive day on Sunday from a mid-February slump, as investors' appetite continues. 

The strong upward momentum drove the daily turnover to cross Tk800 crore mark on the Dhaka Stock Exchange (DSE) yesterday, after it hit the milestone for the first time in two months last week. 

DSEX, the broad based index of the DSE, surged 1.36% to 5,692 as investors kept looking for opportunities. 

Stockbrokers said multiple factors - rising rates, uncertainties regarding corporate earnings and the regulatory environment - had dragged stocks sharply down since the floor price withdrawal on 18 January this year.  

"The market started the week with bullish momentum, extending the recovery mode for the third consecutive session since buyers remained predominant across the trading floor as bargain hunters continued taking positions in the potentially lucrative scrips," wrote EBL Securities in its daily market commentary.  

"The recent increased participation in the market has instilled some confidence among investors, although cautious ones are still observant of the sustainability of the current upbeat vibe," it added. 

The key index DSEX nosedived from the recent high of 6,473 on 12 February to hit 5,479 on 25 April.

Reappointment of the regulatory body chief and announcement of corporate earnings have helped investors make their mind regarding fresh bets in stocks, the market insiders said. 

The return of regulatory interference later last month in the form of squeezing limit for daily price decline – from up to 10% to 3% - triggered a fresh panic among the investors initially. But it did not last when investors saw some signs of recovery. 

Analysts said institutional investors' high appetite for treasury bonds, which are offering a guaranteed 11%-12% annual return, still persists while the two-and-a-half-year downturn in stocks unnerved many. 

A potential imposition of tax on individual investors' capital gain from stocks spread a fresh panic among the investors recently. 

But it seemed to have eased last week after Professor Shibli Rubayat Ul Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC), told journalists that the National Board of Revenue officials already assured him of not doing so as the present market context was not suitable for that.

On Sunday, a total of 259 scrips advanced on the DSE, 98 declined and 44 remained unchanged. 

Pharma sector contributed the highest 27.3% to the DSE's daily turnover, followed by textile and engineering sectors. 

A large number of manufacturing companies with import dependency posted some improvement in profitability in the January-March quarter this year as the exchange rate remained stable compared to the same period last year. 

Most of the sectors displayed positive returns yesterday, out of which service and real estate topped with 4.4% increase in market capitalisation, followed by jute and life insurance. 

The port city bourse, Chittagong Stock Exchange, also settled on the green terrain as the major indices there surged by more than 1%. Turnover there jumped by 137% to over Tk38 crore.