Stocks extend gain as Mideast tensions cool

The equity benchmark index of the Dhaka Stock Exchange (DSE) surpassed the 4,800 mark this week for the first time in one and a half months, as optimistic investors continued their buying spree in lucrative stocks amid easing local and geopolitical tensions.

Market operators said buyers remained dominant due to positive expectations regarding the market outlook, following recent improvements in macroeconomic indicators and a reduction in global tensions after a ceasefire in the recent Middle East conflicts.

"The easing of local and geopolitical tensions, along with a sharp rise in foreign exchange reserves following the release of International Monetary Fund (IMF) loans, has boosted investor confidence," said a leading stockbroker.

The country's gross foreign-exchange reserves reached $30.5 billion on Thursday, hitting a two-year high, following the release of fourth and fifth tranches of loans from the IMF's $4.7-billion lending package.

Despite an initial sell-off in the opening day of the week following the USA's direct strike on Iran, subsequent media reports on ceasefire prompted investors to capitalise on the oversold stocks, said the stockbroker.

Moreover, the seasonal tendency of availing tax rebates by investing in the capital market ahead of the fiscal year-end also contributed to sustained buying pressure, leading the benchmark index to extend its gaining streak for three consecutive weeks.

Of the five trading sessions this week, the first saw a decline of 78 points due to the escalating Iran-Israel conflict. However, the market rebounded in the following four sessions, gaining a total of 156 points.

The DSEX, the prime index of the Dhaka Stock Exchange, ended the week more than 78 points or 1.65 per cent higher at 4,833. The DSEX recovered around 194 points in the past three weeks.

In its weekly market analysis, EBL Securities said the positive macroeconomic developments, including the long-awaited approval of the fourth and fifth installments of IMF loans, helped to instil some broader positive sentiment in investors.

Several market-supportive measures in the final budget passed this week, including the widening of the tax-rate gap between listed and non-listed firms, inspired bargain hunters to invest in stocks.

Investors sought to capitalize on scrips perceived to be trading at attractive valuations, driving the majority of stocks into positive territory, and thus extending the market's recovery, said the stockbroker.

This week, price hike of selective blue-chip stocks, such as Square Pharma, Beximco Pharma, Grameenphone, LafargeHolcim and BRAC Bank pulled the market index up as they jointly contributed one-third of the overall gain in the key index.

As a result, the blue-chip DS30 index, a group of 30 prominent companies, jumped 38 points to 1,820 and the DSES Index, which represents Shariah-based companies, gained 21 points to 1,059.

Apparently, investor participation increased as the total turnover reached Tk 18.13 billion this week, up from Tk 16.27 billion the week before.

And the average daily turnover stood at Tk 3.63 billion, 11 per cent up from the previous week's figure of Tk 3.25 billion.

Investors were mostly active in the food sector, which accounted for 17 per cent of the week's total turnover, followed by the pharma sector (13 per cent) and banking sector (12 per cent).

The market upbeat vibe lured the investors for buoyancy, particularly in cement, telecom, food & allied, engineering, pharmaceutical, banking, and power sector stocks.

Most of the traded issues saw price appreciation, as out of 393 issued traded, 268 saw price hike, 89 ended lower and 36 remained unchanged on the DSE trading floor.

Lovello Ice-cream was the most-traded stock with shares worth Tk 1.20 billion changing hands, followed by Square Pharma, BRAC Bank, Beach Hatchery and Sea Pearl Beach.

The Chittagong Stock Exchange also ended higher, with its All Share Price Index (CASPI) gaining 130 points to 13,400; while the Selective Categories Index (CSCX) rose 89 points to close at 8,199.

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