Weekly analysis: Stocks rebound riding on bank, power issues

Low-cap cos rule week's gainers' chart


Published: October 06, 2018 11:34:39 | Updated: October 07, 2018 16:31:20


Stocks rebounded last week, ending a four-week losing streak, as optimistic investors showed their buying appetite on large-cap issues.

Brokers said most of the investors were buying shares from heavyweight sectors like banking, power and financial institutions, taking the prime index above 5,400-mark last week.

Meanwhile, listed companies with low capitalisation continued to dominate the gainers' chart though they had no price sensitive information (PSI).

Asia Pacific General Insurance was the week's highest gainer with 36.57 per cent increase, followed by BD Finance with 28.39 per cent, VFS Thread Dyeing 26 per cent, Rahim Textile 25 per cent and Sonali Aansh 24 per cent.

The Dhaka Stock Exchange (DSE) also served a show-cause notice on some of the companies several times. However, the companies in their knee-jerk reactions informed the prime bourse that they have no price sensitive information.

"We have brought the low-cap companies under scanner. We are looking into how they generated such abnormal gains," said a DSE director, seeking anonymity.

He noted that even after serving show-cause notice, the prices of many low-cap companies have not stopped rising, which might cause the investors to incur massive losses.

The week featured five trading days as usual. Of them, three sessions closed higher while two posted ended marginally lower.

Week-on-week, the DSEX, the prime index of the DSE, went up by 75.39 points or 1.41 per cent to settle at 5,418, after losing 258 points in the past four straight weeks.

"This upward shift in the index is mainly driven by significant positive changes in banking, financial institutions, power and engineering sectors' issues," commented LankaBangla Securities.

Among the major sectors, power posted the highest gain of 3.93 per cent, followed banking with 2.60 per cent, engineering 1.44 per cent and financial institutions 1.36 per cent.

Two other indices also ended higher. The DS30 index, comprising blue chips, advanced 13.53 points to close at 1,899 and the DSE Shariah Index rose 20.70 points to end at 1,250.

Turnover, another important indicator of the market, stood at Tk 28.79 billion which was Tk 28.49 billion in the week before.

The daily turnover averaged Tk 5.75 billion, registering an increase of 1.03 per cent over the previous week's average of Tk 5.70 billion.

The power sector dominated the week's turnover chart, grabbing 19 per cent of the week's total turnover. It was followed by the textile with 17 per cent and engineering 16 per cent.

The market capitalisation of the DSE also advanced 0.94 per cent last week. It was Tk 3,859 billion on the opening day of the week. It rose to Tk 3,895 billion on Thursday, the last trading day of the week.

According to International Leasing Securities, the bargain hunters showed their buying appetite on large-cap stocks amid optimism.

The stockbroker noted that the optimistic drive was mainly initiated by the news of net foreign fund in stocks turned positive in September 2018 after five months.

The stockbroker noted that some positive news on macro indicators, like stable economic growth and increased inflow of remittance also fueled the upward market trend.

On the other hand, the insurance sector witnessed the highest loss of 10 per cent, followed by food and allied with 1.66 per cent, telecommunication 0.80 per cent and pharmaceuticals 0.20 per cent.

Of the 343 traded issues, 219 closed higher, 93 ended lower and 31 issues remained unchanged on the DSE floor last week.

Khulna Power Company topped the week's turnover chart for the third straight week with 19.49 million shares worth Tk 2.35 billion changing hands.

The other turnover leaders were United Power with Tk 2.13 billion, IFAD Autos Tk 1.59 billion, Active Fine Chemicals Tk 962 million and BBS Cables Tk 780 million.

National Life Insurance was the worst loser, as its price plunged 19.58 per cent last week.

The port city's bourse, Chittagong Stock Exchange (CSE), also ended higher with the CSE All Share Price Index-CASPI-advancing 219 points to settle at 16,660.

The Selective Categories Index - CSCX - also rose 132 points to close the week at 10,090.

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