Fresh investments boost DSE turnover to 2-month high

Daily turnover of the Dhaka Stock Exchange (DSE) crossed the Tk900 crore-mark on Tuesday after two months as investors came forward with fresh funds, hoping that the macroeconomic pressure would ease following the liquidity crunch.

Riding on the investor's participation, the country's premier bourse yesterday witnessed a 26% jump in turnover to reach Tk900 crore – highest since 8 November last year.

A senior analyst of a renowned brokerage firm said investors bid to buy 167 scripts on Tuesday, while they bid for only 117 scrips in the previous session.

He also said the new monetary policy for the second half of FY23 and the assurance of the International Monetary Fund (IMF) for a $450 crore loan heralded a relief from macroeconomic pressure, which boosted the investors' confidence.

The investors' buying spree also helped the DSE's broad index – DSEX – to get back to the green zone from the red yesterday. The DSEX surged 35.67 points or 0.57% to reach at 6,281. The shariah index DSES rose over 0.68% to close at 1,371 and the blue-chip index DS30 jumped 0.63% to hit 2,215 points.

During the trading session, 119 scripts advanced, 68 declined and 186 remained unchanged due to the floor price mechanism.

The port-city bourse Chittagong Stock Exchange's all share price index (CASPI) rose 89 points to reach 18,529, while its turnover jumped by 144% to reach Tk42.27 crore.

The EBL Securities said in its daily market review that the upward rally persisted throughout the session as buy dominance prevailed across the market since opportunist investors returned to the market to harness some quick profits from the rallying issues.

However, investors' participation remains concentrated on particular sectors and selective scrips that are expected to be somewhat immune to earnings volatility caused by recent macroeconomic adversities, it said.

"Dhaka stocks sparked a rally owing to investors' optimism over indications of easing adversities on the macroeconomic front, following the positive node on securing the IMF loan," EBL Securities noted.

However, the central bank's latest monetary policy statement, with a higher inflation target and an upward push in policy interest rate, apparently made stock market investors more cautious, causing a break in the four-day rally on Monday.

As none of the central bank stances were unpredictable and stock investors had already been prepared, the market also had enough buyers to absorb all the supply from the profit-booking investors, said stockbrokers.

The monetary policy boosted investors' hope for a better foreign exchange regime at the end of the year as the central bank announced to embrace a market-based exchange rate system with a target of limiting the difference among various dollar rates within 200 basis points.

The local users of dollars have been suffering from the multiple dollar rates set by the central bank.

The 25 basis points rise in repo and reverse repo to 6% and 4.25% respectively is a contractionary monetary stance by the central bank to arrest inflation within its raised target of 7.5%.         

The Bangladesh Bank removed the floor on banking sector deposit rates, pegged with inflation previously, while it kept the banks' lending rate cap at 9%, except for making it 12% for consumer credit while credit card interest has no cap.

Depositors, who are already earning less than the inflation, tend to look for better returns during inflationary pressures and the capital market might benefit from the removal of the deposit floor cap, according to analysts of two top tier brokerage firms Brac EPL and EBL Securities.

"Weaker banks would go for higher rates to grow deposits, while stronger banks get more deposits despite lower rates as depositors' 'flight to quality' shifts more liquidity to better banks," reads the MPS analysis report by Brac EPL Stock Brokerage.
 
Junk stocks dominate gainers' chart

Junk and "B" category shares yesterday dominated the list of top ten gainers at the DSE, which indicated that the speculative trend is still going, said market insiders.

An investment banker said gamblers take the opportunity to manipulate junk shares with a tide of new investments, and ordinary investors suffer by falling prey to gamblers. So, the regulator has to be strict in this regard.

Central Pharma, which failed to pay dividend for three years, was at the top of the gainers' list with 9.90% jump in price compared to the previous session. The other junk shares were – Oimax Electrodes, Yeakin Polymer, Indo-Bangla Pharma and Pacific Denim.

Hikes in share prices of Beximco Pharma, LafargeHolcim, Orion Pharma, Beacon Pharma and Olympic contributed to the rise in the index on Tuesday.

Most of the sectors displayed positive returns, out of which Services (3.1%), Cement (2.6%) and Paper (1.5%) exhibited the most positive returns on the bourse yesterday, while only Jute (- 0.4%) exerted marginal corrections.