Investor interest in blue-chip stocks lifts turnover to 10-month peak

The Dhaka Stock Exchange witnessed this year's highest turnover on Monday, surpassing Tk 8.5 billion after 10 months, as buoyant investors put fresh bets on selective blue-chip stocks.

Turnover, a crucial indicator of the market, stood at Tk 8.61 billion on the country's premier bourse, climbing further by 11 per cent from the day before.

Fundamentally-strong stocks remained the focus of investors because of their attractive valuations, market analysts said.

The market might have drawn heightened attention also due to high hopes surrounding upcoming earnings disclosures and dividend declarations.

Supported by robust investor participation, the broad index of the prime bourse crossed the threshold of 5,200 after three months as the market had stayed upbeat for five consecutive sessions.

High-net-worth individuals were in a buying mood on Monday, having seen rallies of many stocks for weeks, which created scope of short-term returns, despite concerns over the high tariff proposed by the Trump administration on Bangladeshi exports.

The market showed resilience, riding on positive macroeconomic developments, notably the rise in the foreign exchange reserves, remittance inflow and export revenue. The developments occurred when inflation fell to a 35-month low in June, said Akramul Alam, head of research at Royal Capital.

Moreover, the yield rates of government securities have been on the decline for the past few weeks, a sign that interest rates in the money market will likely come down, he said.

The central bank's decision to cut the reverse repo rate by 50 basis points to 8 per cent last week and rising expectations of an imminent policy rate cut amid signs of inflation cooling helped boost investor confidence.

Mr Alam said there is an inverse relation between government securities' yield rates and the equity market. "When interest rates fall, the equity market gets a boost."

Looking ahead, investor activity is expected to gradually pick up, driven by improvements in the macroeconomic situation and anticipation of an interest rate cut in the upcoming monetary policy statement, Mr Alam added.

That is in alignment with the forecast of global fund manager Asia Frontier Capital (AFC).

In December last year, it predicted a bullish outlook for Bangladesh's stock market towards the second half of this year, driven by an economic turnaround.

Hong Kong-based AFC said the Bangladesh market would rebound primarily on a decline in interest rates and earnings recovery aided by macroeconomic stability. A cooling of inflation would give room to the central bank to begin "a monetary easing cycle at some point", it said.

The Dhaka bourse opened higher with the key index gaining nearly 80 points by mid-session. However, the upward trend lost some steam in the latter half of the session as investors opted to book their recent gains.

The DSEX, key index of the Dhaka bourse, finally was up more than 25 points or by 0.49 per cent to 5,219 as the session drew to a close. It regained 158 points in the past five sessions while the market cap surged by Tk 169 billion.

EBL Securities said investors remained buoyed by the resilient uptrend of the benchmark index.

Selective large-cap stocks, including blue chips, such as Islami Bank, Walton, BAT Bangladesh, Grameenphone, and Prime Bank, pulled the market index up. They jointly contributed almost 30 points to the DSEX surge.

Islami Bank alone contributed a 12.4-point rise of the index as the bank's stock price went up almost 5.0 per cent on Monday. The stock had experienced a 36-per-cent appreciation in the month to Monday.

The DS30 index, a group of 30 prominent companies, jumped 18 points to 1,996 and the DSES Index, which represents Shariah-based companies, gained 10 points to 1,146.

The banking sector kept its dominance in the turnover chart, accounting for 16.3 per cent of the day's turnover, followed by the pharma sector (16.1 per cent) and engineering sector (10 per cent).

The market upbeat vibe continued to lure investors to major sectors, particularly food & allied, engineering, telecom, banking and pharma sectors.

However, most of the traded issues saw price fall, as out of 396 issued traded, 224 closed lower, 117 ended higher, and 55 issues remained unchanged on the DSE trading floor.

BRAC Bank was the most-traded stock with shares worth Tk 246 million changing hands, followed by Khan Brothers PP Woven Bag Industries, BAT Bangladesh, Bangladesh Shipping Corporation, and City Bank.

The Chittagong Stock Exchange also ended higher, with its All Share Price Index (CASPI) soaring 97 points to 14,573 while the Selective Categories Index (CSCX) rose 66 points to 8,897.

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