Weak small-cap firms dominate gainers in the dull market 

Dhaka stocks closed lower for the second consecutive week on Thursday amid increased volatility across the board.

The selloff in a number of previously trendy shares dragged the major indices down, while lacklustre trading appetite reduced daily turnover in the country's premier bourse by nearly one third on average last week.

Meanwhile, a number of small-cap and junk stocks kept rising to allure investors, and at the end of the week, nine out of the top ten gainers on the Dhaka Stock Exchange (DSE) were struggling companies.

For instance, Legacy Footwear, which has a paid-up capital of Tk13 crore, incurred Tk1.12 crore in losses in the last fiscal year that dragged down its net asset value to below its capital, saw its share price go up by 29.2% last week.

Thanks to its price declines in January and February, said stockbrokers, adding that following the price drop, some investors started betting on a possible recovery and kept buying the shares to push the prices higher.

Hakkani Pulp, Fine Foods, Shyampur Sugar, Samata Leather, Zeal Bangla Sugar, Usmania Glass, Jute Spinners, and GQ Ballpen were among the top gainers of last week that barely succeeded in coming out of their problems in business.

Another stockbroker said junk stock players often wait for a dull market situation to pull the stocks up as many of the bored retail investors then prefer to follow them for some quick bucks and they want to forget company fundamentals as the stronger firms were not paying them off in the stock market on a short-term basis.

The overall market has stagnated as nearly three out of every four DSE scrips remain stuck at their floor prices, with no buyer interested in the artificially held prices.

The Bangladesh Securities and Exchange Commission (BSEC), at the end of July, imposed floor prices on individual scrips to stop them from falling forcefully.

Due to the floor prices, approximately two-thirds of the blue chip firms are no longer trading, which frustrates serious investors, including institutional investors.

However, DSEX, the broad-based index of the Dhaka bourse, ended the week on a bullish note as it gained 0.14% to 6,215 points on Thursday. But it was not enough to recover the previous day's 0.26% drop, and the weekly decline of the index was 0.08%.

With turnover dropping below Tk300 crore for the first time in March, the average daily turnover in the DSE dropped by nearly one third to Tk352 crore last week.

Some of the previously rallying stocks including Bengal Windsor Thermoplastics, Rupali Life, and Meghna Life, sharply fell last week as investors were desperate to book their profits from the stocks.

Alongside the ongoing volatility and weak market sentiment, the upcoming quarterly closing of financial institutions was also blamed for the bearish situation, as most institutions try to book profits before their accounts close every quarter.