Market rallies again following breathing session

Stocks experienced another day of big wins following the previous single breathing session. 

On Wednesday, DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), gained 2.2 percent or 100 points; to close at 4,633 after more than five months.  

Turnover on the premier bourse increased by 6.9 percent to Tk1,120 crore, indicating a vibrant market amid the decreased interest rate and improved money market liquidity. 

"Investors exerted buying pressure on most sectors following revived optimism amid the regulator's attempts to undertake strict measures to strengthen the market," said brokerage firm UCB Capital in its daily market commentary on Wednesday. 

"Some positive macro indicators gave investors a major boost," it wrote to clients.

Brac EPL Stock Brokerage, in its market report, compiled the recent positive fundamental factors, helping boost the confidence of analysts and investors to bring the DSEX into positive territory. 

Following a 10.5 percent fall over the last two quarters, the DSEX gained over 16 percent in the new fiscal year that began on July 1. The index shows a four percent year to date gain till Wednesday's closing. 

The $3.1 billion export earnings in July are the highest in monthly records. The same month witnessed a record $2.6 billion remittance inflow, while the foreign currency reserve jumped to a new height of $37.29 billion. 

Analysts from different teams have also linked the recently increased money market liquidity with the interest rate decline. 

The Brac EPL report's outlook section reveals that the analysts there are cheering positive GDP growth forecasts in the pandemic year, and expecting inflation to ease further from the current moderate level. 

A massive stimulus package and low oil and cotton prices would help the economy recover in the coming days, believe the analysts at Brac EPL.

EBL Securities, another top brokerage firm, wrote on Wednesday afternoon, "The index displayed cheerful movement as investors kept on buying fresh stocks at lucrative prices, expecting capital gains with this upward momentum amid optimism towards the market." 

They also said investors took up an optimistic outlook by considering the per capita income of $2,064 in fiscal year 2019-20 and the economic growth of 5.2 percent despite the existing extraordinary circumstances. 

However, investors' attention was mostly concentrated on pharmaceuticals and chemical stocks which occupied nearly 20 percent of the day's turnover. Engineering followed with 12.6 percent trade contribution, while banking stocks came next to be traded at the DSE. 

Most of the sectors performed shiningly on Wednesday. The paper and printing sector, with 5.4 percent gains, led the green table, while jute and non-banking financial institutions followed with more than five percent gains in market capitalisation. 

The mutual funds and general insurance sectors faced some minor corrections. 

Out of 355 issues at the DSE, 199 gained, 115 lost, and the price of 41 remained unchanged. 

The port city bourse, the Chittagong Stock Exchange, also registered an upward trend with an over two percent jump on all the indices; except for CSE 30, its blue chip one.