DSEX reaches 99-day high amid more investor participation
Dhaka stocks, on their way to recovery, gained for the third consecutive session on Thursday to close at 6290.2 – highest since 8 February.
Thanks to the opening of breathing space on both the economic and stock market fronts that attracted more investors in trading.
Investors' participation also reached the highest level since 27 April as the premier bourse registered Tk933 crore turnover in the last session of the week.
What helped the recovery
Following a six-month long depression, the DSEX mainly started to rally in the second week of April as investors started to notice the corporate earnings were not that bad, especially when too many stocks' prices were in the oversold zone, said Akramul Alam, head of research at brokerage firm Royal Capital.
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"The corporate earnings calls say about stability of financial performance amid an adverse business environment, specifically for the large-cap firms like banks, some local giants and multinationals."
Global commodity price slump from the last peak helped domestic inflation to go through a pause, and it ultimately sparked the investors' mood, Alam said.
"The oversold and dry market for months created opportunities for the intelligent investors to buy securities at discount."
Historically, when the average price to earnings (PE) ratio comes at around 14, the DSE attracts buyers and this time it happened again, he said, adding that the average PE was 14.53 on Thursday, up from 14.35 a week ago.
Also, some positive gestures from the regulators to let more funds flow into the market through margin loan providers, mutual funds, and some loans to market intermediaries helped boost confidence.
In the last two months, a large number of small and mid-cap stocks rallied from their floor prices and that also attracted short-term traders to the market, said stockbrokers.
During the closing bell on Thursday, 180 scrips were trading above floor, which was only 65 on 2 January this year. On the other hand, 221 scrips were still stuck at the floor prices.
The market last week
The DSEX ended the week in green territory owing to the continuous buy dominance of buoyant investors as they chased sector-specific issues with quick gaining potential, EBL Securities wrote in its daily market commentary on Thursday.
In a week, the DSEX was 0.28% up, while the blue chip index DS30 was 0.04% up, and the Shariah index DSES fell by 0.27%.
Daily average turnover, despite the spike on Thursday, was 7% down to Tk736 crore from that in the previous week.
Of the sectors, general insurance, food, life insurance, IT, and textile led the turnover.
General insurance sector also led the gainers last week with an 11% increase in the sector's total market capitalisation, followed by the 4% gain of the life insurance sector. Ceramic, food, paper, bank, engineering, fuel and power, textile, miscellaneous, mutual funds, financial institutions inched up.
On the other hand, jute, cement, services, IT, tannery, travel, and pharmaceuticals sectors faced moderate corrections.
CSCX, the major index of the Chittagong Stock Exchange, gained 0.18% last week to close at 11,094.
88 scrips advanced and 65 declined at the port-city bourse.
