Stocks close higher for eighth consecutive session

Defying all the concerns for a correction, the stock market closed in the green for the eighth consecutive session on Thursday to secure new heights for the new generation indices and market capitalisation.   

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), gained 3.98% over the week and closed at 7,258 – the highest in its history since the index launched in 2013. Earlier, in 2010, its predecessor DGEN crashed after reaching 9,000 points.

As many large-cap stocks such as Square Pharmaceuticals, British American Tobacco, Beximco Pharmaceuticals, and Eastern Bank advanced keeping their earnings disclosure ahead, the indices got strong momentum, observed EBL Securities analysts.   

At the end of the week, the total market capitalisation of the DSE listed scrips shot up to a record high of Tk5.86 lakh crore, 4% up from that of a week ago.

"Investors stayed bullish about the market despite the recent cautionary stances from the central bank," EBL Securities wrote to their clients.

A fresh fund inflow to the stock market is going on and investors seem to have been parted into two groups in terms of their risk appetite, according to stockbrokers.

They said a group of investors has been rushing for low-cap companies or even many junk stocks for quicker gains, while over the second half of the week, strength returned for most fundamentally sound scrips as they have healthier earnings with a growth history.  

Companies with poor earnings were at the center of the market discussions over the week as a large number of low-cap scrips dramatically gained price over the recent weeks that drew criticism. However, the regulatory moves to look into the dynamics behind junk stocks' sharp rise tamed the riskier speculations slightly and the blue-chip stocks took the baton over to float the indices up.

Against the 4% rise of DSEX, which includes maximum stocks with diversified profiles, blue-chip index DS30 advanced 6% over the week to close at 2,647, while Shariah-compliant securities' index DSES closed at 1,509 after gaining 5.5% in a week.

Investors' participation in daily trading increased in line with the price hikes across sectors. Average daily turnover for DSE increased by one-fourth to Tk2,778 crore, close to its historic highs.

No sector except for non-life insurance suffered a drop in market capitalisation this week.

As investors are counting on school reopening to see a higher demand for footwear, snacks, and paper products, the sectors came up at the top positions of the weekly return table.

Two major footwear market players Bata Shoe and Apex Footwear gained 29% over the week and the weekly sectoral return was 15.2%.

The food and allied sector gained 11.7%, while jute, services and real estate, paper, travel, pharmaceuticals, telecom, engineering, non-bank financial institutions (NBFI) followed the trail with 5% to 8.6% gains in a week.

The banking sector was the least gainer with a 1.7% expansion in market capitalisation.

Non-life insurers which are in a correction phase now lost market capitalisation by 3.6% over the week.

Engineering, textile, pharmaceuticals, fuel-power, and NBFI were the turnover leader sectors at the DSE.

Fuel and power stocks moved higher this week as the government is going to allow quick rental power plants for another five years which may offer some listed companies another five years of high profits.

School reopening might help increase fuel demand in the coming days as students need to take a vehicle to their campus from home, expect analysts.

In the DSE, 210 scrips, mostly with positive earnings, advanced over the week, while 153, mostly the correcting low and mid-cap stocks, declined and 17 remained unchanged.

Chittagong Stock Exchange (CSE) also closed higher with stronger participation.