Stocks down as investors continue profit booking

Amid the continuation of profit booking, stocks at Dhaka and Chattogram ended the Sunday session in red terrain.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), moved moderately up by 12.00pm, and was dominated by the sellers most of the remaining 150 minutes of the session.

"The DSE cooled off as stock investors continued to take profit since the market rally prompted investors to liquidate their positions in the recently outperformed stocks," said EBL Securities in their daily market commentary to clients.

At the end of the week's first session, 230 of the DSE scrips suffered price fall, while 113 gained, and 33 remained unchanged.

Yesterday, the DSEX was down by 13 points or 0.19% to close at 7,237 points, while the blue-chip index DS30 fell by 0.3% and Shariah-compliant shares' index DSES fell by 0.4%.

Investors' participation, however, was higher as the DSE registered Tk2,257 crore in daily trading turnover against Tk1,852 crore in the previous session.

Trading turnover increased amid the dominant selling pressure as investors were favoring to book profits out of their concerns that a price correction is overdue since the index skyrocketed from a midterm base a year ago.

The DSEX, which went below 3,600 points in March 2020, shot up to 7,336 earlier this month and nervous investors woke up to book some profits as they saw contradictory perspectives on market direction.

The Bangladesh Securities and Exchange Commission (BSEC) and market groups argue that the rising index alone is not a risk at all as a large number of listed companies are performing well and their stocks are trading at a low price compared to corporate earnings.

The average price to earnings (PE) ratio of the DSE scrips is at 20, which is below 17 now if the loss-making firms are excluded from calculation.

Investors generally assume the stocks with low PE ratio undervalued and analysts do not think that the average market PE ratio is high if compared to the peer markets.

The Bangladesh Bank in recent months has been expressing its cautious stance regarding the stock market, suspecting stimulus fund diversion to stocks and it is taking actions against banks for violating their rules in stock investment.

On Sunday, the IT stocks dominated the gainers' table that beefed the sector's market capitalisation by 3.19%, according to the UCB Stock Brokerage report.

Cement, paper and printing, miscellaneous, textile, jute, non-bank financial institutions, and service-real estate sectors added to their market capitalisation on Sunday.

Life insurers suffered the maximum price correction after a short term rally this week. Mutual funds, engineering, travel and leisure, banks, tannery, non-life insurers, ceramic, food and allied, pharmaceuticals, fuel and power, and telecommunication sectors were the losers of the day.

Pharmaceuticals came up as the turnover leader sector with 19.13% contribution in the day's transaction in the DSE.

Indices at the Chattogram Stock Exchange (CSE) also fell on Sunday and turnover increased to over Tk95 crore from less than Tk51 crore on Thursday.