Turnover reaches 4-week high as bargain hunting resumes

With good news from respective regulators about both the floor price and the lending rate cap, stock investors seemed to be opening their purses for some oversold shares on Tuesday which helped the indices inch up and daily turnover reach a four-week high.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSEX), closed above 6,205 for the first time in 2023, while turnover in the premier bourse increased to Tk462.5 crore, highest since 13 December.

Investors, out of their indecision regarding how the restrictive measures like floor prices on individual scrips in the capital market and interest rate cap on lending rates would go away in the new year, went into hibernation in December.

The confusion and debate regarding the floor prices kept intensifying until the Bangladesh Securities and Exchange Commission (BSEC) announced a week ago that it was not going to remove the floor price for the remaining 232 scrips until the secondary market returns to a good health.

Meanwhile, following a series of 1% fall a day, a few dozen of the 168 small-cap scrips had buyers at the declined prices that helped increase spontaneous trading in the bourses.

In a week, around three dozen scrips returned in regular trading from their previous state of being stuck on the floor or the bottom circuit.

The 168 scrips are being allowed to fall by 1% a day since their floor removal in December.

Investors are getting some confidence back seeing a number of scrips bouncing back from the bottom circuit levels, said stock brokers.

Economic updates like the central bank clearing some important foreign payments that brought down foreign currency reserve to below $33 billion, the government working to fit itself for the $4.5 billion loan from the International Monetary Fund, new power sources joining the national grid — are helping to build a moderately optimistic or neutral outlook among stock investors, said analysts.

In the global context, slight cooling down of the dollar and various commodities also helped stock investors' optimism to strengthen a bit.

"The market created investment opportunities for bargain hunters who perceived some sector-specific issues trading at a lucrative price level," wrote EBL Securities in its daily market commentary on Tuesday.

Also, an increasing number of stocks returning to normal trading is helping investors to rebalance their stock portfolio to a small extent.

However, quick gain opportunities seemed to have fueled the upbeat momentum most this week.

"The market held its upbeat momentum throughout the session as buy dominance prevailed across the bourse. Investors chased selective issues to secure a quick-gain opportunity amid the prolonged bearish tone in the market," EBL Securities analysts wrote.

"However, cautious investors are still observing the market momentum in the face of a bleak outlook of the economy and dismal performance forecasts of the majority of listed companies," they added.

Maybe that is why no sector, or scrip is making big rallies and instead are moving ahead through small swings.

No sector on Tuesday gained or lost their market capitalisation by more than 1%. Most of them displayed mixed returns, out of which services, miscellaneous, and pharmaceuticals gained, whereas jute, travel, and general insurance inched down.

Pharmaceuticals contributed the highest 22.4% to the DSE turnover on Tuesday, followed by IT and life insurance making 16.5% and 8.4% respectively of the DSE turnover.