Stocks see buyers as bargain hunters return
Following two consecutive sessions of sharp declines, stocks had a breathing space on Wednesday.
Thanks to the bargain hunters who came up to bag some of their wanted stocks at a cheaper price, while the indices came down to the level of the recent low.
Unlike the two previous sessions, when nearly two-thirds of the listed scrips had no buyer at the bottom circuit breakers that allow no scrip nowadays to fall by more than 2% a day, investors made their bids to buy shares on Wednesday.
Convenience returned for the sellers as they saw some buyers.
Out of the 382 scrips in the Dhaka Stock Exchange (DSE), 110 advanced, while 218 declined on Wednesday.
After the volatile 270 minutes, DSEX, the broad-based index of the premier bourse, closed 0.23% lower at 6138 - which was slightly higher than the intraday low. The index fell by more than 1% in each of the two previous sessions.
As the market made matches between more buyers and sellers, daily turnover in the DSE bounced back to over Tk665 crore, from Tuesdays 15-month low of Tk319 crore.
Several events together encouraged bargain hunters to become active on Wednesday, said stock brokers.
Central bank's move to calculate banks' capital market exposure based on the cost instead of the market price of invested stocks alongside the plan for excluding secured bonds from exposure calculation is being perceived to be a market-friendly development, at least from the long term perspective.
A banking sector analyst at a leading brokerage firm told The Business Standard, "If the cost basis exposure calculation is introduced, and the bankers have confidence in the market, some banks might prefer using their unutilised opportunity of making further stock investments, as the worry about the obligation to sell off as soon as the market prices of held stocks get higher would go away."
Since the market is trading lower than its recent peaks, exposure of most of the actively trading banks might go a few percentage points higher if calculated on the cost basis, but the analyst was not expecting any significant net selling pressure due to the proposed cost basis exposure calculation.
Meanwhile, having two consecutive bad days, optimistic investors cheered the fact that the Bangladesh Securities and Exchange Commission (BSEC) Chairman Professor Shibli Rubayat-Ul-Islam met Prime Minister Sheikh Hasina at her office on Wednesday to hand over the commission's donation to the prime minister's relief fund to support the flood-affected people, to share the good news that the BSEC chairman had been elected the vice chairman of the regional committee of international body of world's securities regulators, and also to discuss about the capital market issues.
The stock market has been under stress since October last year as global commodity and supply chain costs, inflation, and interest rates kept going up, while the fresh round of macroeconomic turbulence, triggered by Russia's Ukraine invasion, added further downward pressure on the stocks.
Through some volatile swings, the market gradually came further down from its October 2021 peak as macroeconomic updates have been worsening day by day.
Meanwhile, DSE investigation reports covered in the media on how an errant individual investor and his associates manipulated the prices of too many stocks to amass an unbelievable fortune during the two-year rally since the mid-2020, and the perception that the BSEC tends to overlook the market crimes seriously hurt decent investors' sentiment, said stockbrokers.
DSEX went up to over 7,400 points last October.