Stocks back to red zone on weak private growth

Stocks took a nose-dive yesterday as earnings results flooded in the market but failed to uphold expectations of its investors.

A total of 39 companies posted their quarterly results yesterday, of which, 20 companies posted growth as compared to the same quarter in the previous year while 19 reported weaker profits in the last quarter from October to December 2019.

The data obtained from the DSE website showed pharmaceuticals have reported strong earnings and textile companies took a beating last quarter.

"Business of pharmaceutical companies are expected to grow as people in Bangladesh are becoming more health conscious," said Mohammed Rahmat Pasha, MD and CEO of UCB Capital Management Ltd.

He added: The pharmaceuticals sector is one of the few sectors in Bangladesh that operates through its own funding, without needing to borrow from the banks in most instances.

At the peak of the on-going earnings season, investors are eyeing mostly, engineering, textile and pharmaceuticals stocks based on the market turnover contribution.

Investors took a cautious approach as the earnings of some large-cap companies lagged behind their expectations, according to the Daily Market Review of EBL Securities Ltd.

The telecom giant Grameenphone has recently declared 130 percent cash dividend, which is its lowest in the last 10 years.

In addition to that, its parent company Telenor may not approve the company's final dividend until the central bank withdraws its objection to repatriate dividend to Telenor, according to the Daily Market Review of UCB Capital Management Ltd.

This news has affected the sentiment of the investors, the review added.

DSEX, the key index of the Dhaka Stock Exchange, slipped 29 points to close the day at 4,482.

DSES, the Shariah-based index, lost 6 points to settle at 1,029 while DS30, the blue-chip index, dropped 17 points to stand at 1,526.

At the port city bourse, CASPI – the benchmark index – gave up 52 points to close at 13,664.

The prime index started the session with upward momentum but failed to sustain the positivity in the later hours of the trading session.

Investors have taken a cautious approach yesterday as the earnings of some large-cap companies lagged behind their expectations, according to the Daily Market Review of EBL Securities Ltd.

Furthermore, the news of the private sector growth reaching 11 years low, led the investors' skepticism on sector-specific stocks, added the report.

Participation of investors dropped 6 percent yesterday and settled at Tk439.6 crore turnover value, from Tk467.5 crore in the preceding session.

Engineering stocks contributed the highest, 17.3 percent, to the total turnover value, followed by textile stocks, adding 13 percent, and cement stocks, adding 11.2 percent.

Most of the sectors witnessed price correction yesterday, with food and allied stocks facing the highest loss of 2.8 percent.

Among the large-cap sectors, telecom posted a loss of 1.9 percent, pharmaceuticals dropped 1 percent, bank stocks dipped 0.9 percent and financial institutions shed 0.5 percent price.

The telecom giant Grameenphone has recently disclosed that Telenor, its parent company, may not approve the company's final dividend until the central bank withdraws its objection to repatriate dividend to Telenor, according to the Daily Market Review of UCB Capital Management Ltd.

Analysts told The Business Standard that this news has negatively affected the sentiment of the investors and the stock ended up losing 2 percent of its market capitalisation.

Lafarge Holcim Bangladesh Ltd dominated the turnover table with a turnover value of Tk27.8 crore, closing the day at Tk47.5 per share. The stock was followed by BBS cables, with a turnover value of Tk11.3 crore, closing at Tk64.2 per share.

The KDS Accessories Ltd topped the gainers' table advancing 9.9 percent, closing at Tk42.3 per share, while MI Cement Factory Ltd was the day's worst loser after shedding 7.8 percent and closing at Tk38.8 per share, according to the DSE website.

Losers outnumbered the gainers as out of the 355 issues traded, 114 advanced, 180 declined and 61 remained unchanged on the DSE trading floor.