Rallying insurance stocks make one-third of DSE turnover
Highlights:
- All the non-life insurers took off the floor prices
- Many rallied 10-25% in a few weeks
- DSEX closed 0.22% higher at 6,339 points
- Dhaka bourse observed an increase in participation
- Its total turnover rose by 13.3% to Tk1,175 crore
Non-life insurance stocks, after a long depression, appeared to have found some ground beneath their feet on the bourses of Dhaka and Chattogram, while life insurance stocks have also been in a strong rally for a week.
In May, all the non-life insurers took off the floor prices, while many rallied 10-25% in a few weeks.
The two types of insurers together contributed to nearly one-third of the daily turnover on the Dhaka Stock Exchange (DSE) on Sunday.
Also, the insurers helped DSEX march ahead, defying several profit booking pressures last week amid tensions regarding the Bangladesh-US relationship involving the upcoming national election and uncertainties about the upcoming budget.
DSEX, the broad-based index of the premier bourse, closed 0.22% higher at 6,339.
Stockbrokers said that, anticipating a higher interest environment, many investors found oversold insurance stocks lucrative for a capital gain on top of the dividends on the table.
Higher interest generally helps increase the cash-surplus insurance industry's financial income, said analysts.
A number of insurers' earnings were not that impressive last year amid a decline in business due to the import slowdown, a higher cost of foreign reinsurance premium due to the soaring dollar, and a decline in investment income due to the market depression, they added.
However, many insurance companies, defying the tough times, posted better profits and continued their dividends.
Besides insurance, cement, tannery, miscellaneous, mutual funds, paper, food, financial institutions, and banks were the winning sectors on Sunday. On the other hand, jute, IT, service, travel, and textiles were the losing sectors in the stock market.
"The equity indices of the Dhaka bourse extended their gaining streak owing to investors' continuous buying dominance in chasing quick rallies in selective sectors," EBL Securities wrote in its daily market commentary.
Investors' spontaneous participation has added strength to the current rallies, it added.
Meanwhile, the Dhaka bourse observed an increase in participation as total turnover rose by 13.3% to Tk1,175 crore.
The Chittagong Stock Exchange also settled on the green terrain, as CSCX, the broad-based index there, was up by 0.23% to 11,177. Turnover in the port city bourse declined 0.6% to Tk19.3 crore.