Stocks rally on first day after national polls
The benchmark index DSEX of the Dhaka Stock Exchange (DSE) rose 25 points to reach 6.269 and the blue-chip index DS30 surged 7.96 points to 2,102 on Monday (8 January)
Stocks rallied on both the Dhaka and Chattogram bourses on the first day after Sunday's national elections, with investors breathing a sigh of relief from prevailing tensions on the political front.
Market participants say there were uncertainties around the election. Once the process concluded without any major issues, investors regained confidence. However, doubts linger about the sustainability of the market's rise.
The Dhaka Stock Exchange's (DSE) benchmark index, DSEX, surged 25 points to 6,269, and the blue-chip index, DS30, soared 7.96 points to 2,102 on Monday.
The market turnover increased by 28% to Tk441 crore at the country's premier bourse.
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During the session, 119 scrips advanced, 44 declined, and 169 remained unchanged. However, 224 scrips, which account for around 60% of the total listed scrips, were stuck at the floor price.
Besides, all-share price index CASPI of the port city bourse Chittagong Stock Exchange (CSE) jumped 59 points to 18,568.
Top executives at several leading brokerage houses say it is known that institutional investment increased slightly in the market, which has helped the index rise.
The rise of the index is a significant effect of the increase in the price of some shares in the banking sector, they added.
Banking shares remained stagnant for a long time, but the shares of some banks witnessed the highest price increase on Monday.
The share prices of some companies with good fundamentals also increased.
In its daily market commentary, EBL Securities said investors' buying interest was focused on specific bank stocks that they believed would declare satisfactory financial results in the upcoming year-end earnings disclosures.
However, investor participation has yet to rebound since cautious investors still clung to a bleak outlook on the market's momentum amid concerns regarding the grappling macroeconomic environment, it added.
On the sectoral front, engineering issues exerted the highest turnover, contributing 14.2% of the total DSE turnover, followed by banking at 13.2% and general insurance at 11.9%.
Bd Thai Food, owned by the health minister's family, topped the turnover chart as its shares traded at Tk24.54 crore, followed by Intraco Refuelling, Sea Pearl Beach Resort, Fu-Wang Food, Rupali Bank, and Midland Bank.
Midland Bank topped the gainer table at the DSE, where its share price increased 9.92% to Tk15.5 each. The other top gainers are Midas Finance, BD Thai Food, Union Capital, and Rupali Bank.
The worst-performing share of the day was Standard Ceramics, which was followed by Standard Insurance, Aziz Pipes, and Shyampur Sugar.
Brokers concerned over floor price
At present, more than 60% of shares are stuck at floor prices, leading to a lack of buyers and sellers of these shares.
In a recent meeting with the Bangladesh Securities and Exchange Commission (BSEC), top officials at brokerage firms and merchant banks expressed their concerns over the floor price mechanism.
An official at a brokerage house who had participated in the meeting said market turnover has decreased at an alarming rate since the imposition of this floor price nearly two years ago.
A lack of buyers and sellers has created illiquidity in the stock market. Also, many investors fell into trouble with their margin loans as they could not sell the shares. This has created a lack of confidence among investors, the official added.
BSEC spokesperson Rezaul Karim said, "The situation of the stock market will improve after the national election. Then a lot of investment will come. We asked brokers to work for proper stewardship of this investment. If the market is good, there will be no crisis of confidence."
He also said the floor price restriction will be removed in a short time, considering the market conditions.
"If the floor price restriction is lifted, there will be a lot of sales pressure, and funds are needed to absorb it. Already, our chairman has approved Tk100 crore from the CMSF for the intermediary firms. He also urged bank executives to invest more in the capital market. So, there will be additional funds in the market," Karim added.
