Broad indices up in a volatile week, blue-chips in red

Broad indices at both the bourses ended in green in the past week amid investors' caution, profit booking efforts and an increased volatility as demand for mid-cap manufacturing and services stocks increased. 

On the other hand, due to profit booking in selective large-cap scrips pushed the blue-chip indices slightly down at the end of the week. 

DSEX, the broad-based index at the Dhaka Stock Exchange (DSE), was up by 22 points or 0.31% to close at 7,251 on Thursday. 

DS30, the index of blue-chip companies, closed at 2,674 on Thursday, which was at 2,675 a week ago. 

The market witnessed mixed sessions and volatility this week as most investors opted for a cautious approach while some investors engaged in profit booking, said EBL Securities Research in their weekly market commentary. 

However, Ministry of Finance's decision to deduct interest against the saving certificates helped energize the bulls and increased more buy orders from them. 

Among major sectors, engineering, travel and leisure, and textile sectors experienced price appreciation as the companies from the sectors are set to come up with their annual financial updates and dividends. 

Mutual Funds, ceramics and IT sectors suffered the maximum correction.  

Average daily turnover declined by 12.70% to Tk1,942 crore in the last week. Textile stocks made 14.2% of the weekly turnover, while pharmaceuticals and chemical contributed 13.3%. 

CSCX, the broad-based index of the Chittagong Stock Exchange (CSE) closed at 12,687 points to gain 0.03% over a week. CSE30 closed 0.84% lower. 

Against 149 advancing scrips 179 declined and 14 remained unchanged in the port-city bourse, while in the DSE 162 advanced, 198 declined and 18 remained unchanged. 

DSEX, rising 34.22% this year following the 21.3% gain in 2020, pushed the DSE's average price to earnings (PE) ratio to over 20, according to DSE. 

The bourse calculates PE ratio including the scrips with negative earnings per share. 

Excluding the lossmaking companies, the market PE is at near 17 now, according to calculation by UCB Stock Brokerage. 

PE ratio is the popular indicator to reflect stock price level against corporate earnings. 

It is generally assumed that, buying higher PE stocks investors might need to wait for more years to get back their invested capital out of companies' profits alone. 

DSE listed scrips are priced 2.1 times higher than their underlying net assets, according to EBL Securities Research.