DSEX recovers in the last session

Top twenty institutional stockbrokers requested for Tk10,000 crore from the government as soft loan for all the market intermediaries that helped boost investors' optimism. 

A sharp rise in Thursday's trading helped the major indices to recover the losses incurred over the week.

The DSEX, Dhaka Stock Exchange's (DSE) broad-based index, started the week with moderate gains, but the panicked sellers pushed the indices down in the next two sessions. 

Wednesday's market scenario was flat and the consolidation was followed by a sharp recovery on Thursday. 

The DSEX closed the week with a 0.02 percent gain at 4,772. Thursday's 0.96 percent gain helped the index offset the 1.1 percent fall on Tuesday. 

But continued selling pressure in some large-cap stocks did not let the DS30 recover what it lost earlier this week. Ultimately the blue chip index lost 0.23 percent to close at 1,675. 

Increased buy orders from Shariah-compliant investors resulted in a 0.22 percent weekly gain for the Shariah index DSES, on the other side.

At the weekly close, 89 scrips at the DSE gained while 245 lost price. 

Current sentiment

Analysts believe stockbrokers' initiative to seek fresh fund helped the recovery. 

Moderately encouraging corporate earnings, posted over the week, also inspired the buy-side investors. Listed companies, posting earnings growth this season, outnumbered the ones with fall in earnings. 

The Investment Corporation of Bangladesh (ICB) has made a move to float another open-ended mutual fund with a target size of Tk10,000 crore, which is also believed to support the country's stressed capital market. 

News like the government is going for power tariff hike or higher loan default in the industrial sector increased investors' caution, resulting in a lower weekly turnover amid volatile trading condition. 

Power generation, fuel distribution, telecommunication, steel, and bank sector secured a weekly gain whereas ceramic, plastics and packaging, jute, mutual fund, and pharmaceutical had suffered a loss of market capital. 

The sought funding

"We, some market intermediaries, have sent a letter to the finance ministry on Thursday, seeking a fund totalling Tk10,000 crore that can be disbursed among all the market intermediaries who need to inject fresh capital to their portfolios," said Chief Executive Officer of Dhaka Bank Securities Ltd Mohammad Ali who is also one of the signatories of the letter. 

"Our proposal aims to increase institutional buy orders which is a must to stabilize the market at this point," Ali added. 

The signatories of the letter sought the fund for a six-year term, of which the first two years will be a grace period and all the borrower intermediaries will repay the liability in the last four years through biannual payments. 

They demanded the fund at three percent annual interest rate.

If their proposal is granted, all the registered broker-dealers, merchant banks and asset management companies will be eligible to receive their rational and necessary portion. 

"We may allocate the fund internally based on institutions' need and creditworthiness," said Ali.