Insurance stocks saved DSEX from bigger fall 

Dhaka-Chattogram stocks continued to suffer selloff on Monday and bouncing back non-life insurance stocks helped the broad-based indices avert a bigger fall.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), fell by 0.07% to 6,337, while the blue-chip index DS30 fell by 0.24% and the Shariah-based companies' index DSES fell by 0.32%. 

DSEX fell by 0.36% in the previous session.

Stockbrokers said the entire market was facing a selloff while investors chased insurance stocks that bounced back from the recent low a week ago. 

Bancassurance – selling insurance products through bank branches – and mandatory motor vehicle insurance were the regulatory cards on the table investors were counting on as both the government moves were expected to help increase insurance penetration in the country as well as the general insurance industry's revenue, they added. 

Sixty-nine DSE scrips, including 38 non-life insurance stocks, advanced while 102 declined. 

With 38 of the 42 non-life insurance stocks gaining on Monday, the sector's market capitalisation increased by 3.7%. Alongside, the banking sector inched up by 0.3%, thanks to the low-cap Rupali Bank shares' sharp rise. 

On the other hand, jute, tannery, cement, paper, services, IT, miscellaneous, life insurance, textile, food, pharmaceuticals, ceramic, engineering and energy sectors' market capitalisation declined. 

"The market observed a topsy-turvy swing as the core index managed to remain afloat in green territory till the mid-session, while the subsequent sell pressure led the market to close in negative terrain for the second consecutive session," wrote EBL Securities in its daily market commentary.

The analysts attributed the extension of the market's losing streak to the investors' preference for safeguarding funds from the prevailing volatility in the market. 

The market has been volatile for weeks and the smart money was shifting sectors, stocks after booking short-term gains, while rumour-based stocks have been leading the volatilities. 

Also, the winning insurance stocks have been volatile over the last week amid confusing developments on the regulatory fronts. For instance, the market positively reacted to the last week's news on the government's nod for publishing the gazettes for bancassurance, and again the sectoral stocks faced a selloff when the insurance industry requested some changes in the draft guidelines citing some practical inconveniences.  

As many of the conservative and patient investors were observing the situation, especially when fixed income instruments including treasury bills and bonds, and fixed deposits at the bank and non-bank financial institutions started to generate higher returns since the beginning of July, turnover in the Dhaka bourse fell by 15% to Tk633 crore. 

Rising interest rates generally tend to attract risk-averse investors to fixed-income instruments from stocks. 

General insurance, food and life insurance sectors together contributed to 45% of the DSE turnover on Monday. 

CSCX, the broad-based index of the Chittagong Stock Exchange, fell by 0.1% to 11,191. Turnover in the port-city bourse fell by 44% to Tk8.7 crore.