Indices decline as majority of stocks face selling pressure

Following three consecutive green sessions, stock indices in the Dhaka and Chattogram bourses declined on Sunday as the majority of scrips faced selloffs amid a rush for some trendy shares.

The market started the day with moderate strength but failed to sustain due to the profit booking pressure, said stockbrokers.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), dropped 0.33% to close at 6,538.

"The equity indices of the Dhaka bourse ceased their upward trend after a three-day rise as sellers outnumbered buyers on the trading floor since investors continued partial liquidations of their holdings and sought to rebalance their portfolios by shifting towards particular large-cap stocks that are being traded at a lucrative price level after booking profits from the recent quick-gaining stocks," EBL Securities wrote in its daily market commentary.

Blue-chip index DS30 inched down by 0.12% while Shariah index DSES dropped by 0.63% on Sunday.

Only 45 advanced, 219 declined, and 109 scrips remained unchanged in the country's premier bourse.

The market remained mostly afloat for the session despite volatility as investors' buying spree was concentrated on selective stocks while the others extended their correction mode, said EBL Securities.

"However, the last-hour heavy selling pressure pushed the indices down."

Meanwhile, the Dhaka bourse also observed a decrease in participation while the total turnover declined 9.9% to Tk1,692 crore.

Pharmaceuticals, miscellaneous, and engineering sectors contributed 27%, 20%, and 8.6% respectively in the total DSE turnover on Sunday.

Most of the sectors displayed dismal returns, out of which IT, paper, and textile led the declines with around a 2% decline in their respective market capitalisations.

Services, miscellaneous, and travel sectors helped offset the selloff in other sectoral stocks with their 3.4%, 2.2%, and 1.1% gains respectively.

Turnover in the Chittagong Stock Exchange (CSE) increased to Tk41 crore from Tk28 crore, while none of its indices managed to avert the decline on Sunday.

Stockbrokers said the bourses are observing funds inflow nowadays as many businessmen find it lucrative to take positions in oversold stocks while their regular business is facing the pinch of a rising dollar, higher inflation and the increasing costs of business.

However, the situation is also increasing caution among the investors as the corporate earnings outlook for the coming months is a little uncertain.

The average price-to-earnings ratio in the DSE, which reflects how expensive stock prices are in comparison to corporate earnings, is at 15.23 based on the earnings of the last four quarters.

The stock market on average is trading 1.74 times higher than the total underlying assets of listed companies, according to the EBL Securities report.