DSEX inches down amid investors' confusion

DSE on Sunday:

• DSEX down by 0.03% to 6,192
• Turnover stood at Tk284.2cr
• 40 scrips advanced, 122 declined
• Some 100 had bidders on Sunday, up from that of 70 on 3 January
• Winning sectors: IT, life and general insurance
• Losing sectors: Jute, ceramic, and food

Investors were left confused by the regulatory announcement to maintain floor prices, but the inflow of funds into certain stocks led many to believe that the smart money was still showing interest in the market.

DSEX, the broad based index of the Dhaka Stock Exchange (DSE), inched down by 1.7 points to 6,192 during the closing bell of the Sunday session.

In continuation of the previous session's downward trend, the index kept falling till 1.00 pm and the bargain hunters, buying the most popular stocks, pushed it up to near the opening value.

"The equity indices of the Dhaka bourse failed to remain afloat as investors' sell pressure was dominant across the bourse owing to the indication of a liquidity crunch in the money market along with the prevailing adversities on the macroeconomic front" said EBL Securities in its daily market commentary.

The market witnessed a downbeat momentum throughout the session since investors continued to offload their holdings as their willingness to take long-term positions in equities weakened due to the dismal performance forecasts of the listed companies.

Moreover, the squeezed liquidity in the money market, exacerbated by a six-year high call money rate, has also shrunk money flow in the capital market.

However, although the majority of stocks witnessed corrections, the 1% lower circuit breaker on particular scrips provided a cushion to the ailing market. Meanwhile, the Dhaka bourse observed a decrease in participation while the total turnover declined by 10.6% and stood at Tk284 crore.

Stockbrokers said, investors are really confused.

A large number of investors are stuck with their funds in the declining market, while fresh money is waiting to learn about the next big winners.

The widespread dilemma is not allowing any stock to sustain rallies.

There are undervalued stocks which are technically in downtrend, on the other hand some overvalued stocks are still in demand, said analysts.

IT, life insurance and general insurance were the winning sectors on Sunday, while jute, ceramic and food were the losers of the day.

Out of the 391 issues traded, 40 advanced and 122 declined while the majority, stuck on the floor prices, remained unchanged in the DSE.

The economy, yet to clear the uncertainties, shows some short-term signs of recovery and this has been exactly reflected in the investors' behaviour, said analysts.

Majority of stocks have been artificially held high by the floor price imposed by the Bangladesh Securities and Exchange Commission (BSEC) at the end of July.

However, the recent breathing space for 168 scrips to fall by 1% a day helped increase the number of scrips that attracted bidders.

Some 100 of the 400 scrips had bidders on Sunday, up from that of 70 on 3 January.