Weekly analysis: Stocks snap four-week winning streak

The stock market suffered a major correction in the outgoing week, snapping a four-week gaining streak, as risk-averse investors chose to book quick profit on large-cap stocks.

Week on week, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), dipped 141 points or 2.70 per cent to settle at more than one-month low of 5,095.

Market analysts said the telecom regulator's strict stance on Grameenphone (GP), coupled with soaring non-performing loans in the banking system made the investors worried, prompting them to resort to sell-offs in all other sectors.

The Bangladesh Telecommunication Regulatory Commission (BTRC) has recently threatened to cancel the licence of the largest listed company over unpaid audit claims.

GP, the largest market-capitalisation stock, plunged 2.40 per cent during the week, in a huge blow to the index, said a leading broker.

He noted that the growing non-performing loans (NPLs) also hit banking stocks hard, as the heavyweight sector posted the highest loss of 3.46 per cent, with the prices of 28 listed banks, out of 30, going down during the week.

The EBL Securities said general investors got panicked over the GP and NPL issues, which led to sell pressure on almost all shares except multinational companies.

According to the International Leasing Securities, the price fall in large-cap stocks like GP, BRAC Bank, Olympic Industries, and the United Power played a major role in the correction of the prime index.

The stockbroker noted that investors went on a selling frenzy following the newspaper reports exposing a further rise in defaulted loans in the banking sector.

Besides, banks will have to adjust their loans-deposit ratio within September which might reduce their scope for investment, the stockbroker added.

The outgoing week saw five trading days as usual. Of them, four sessions ended lower while one saw marginal gain.

Two other indices also closed lower. The DS30 index, comprising blue chips, fell nearly 50 points to finish at 1,800 and the DSE Shariah Index lost more than 23 points to finish at Tk 1,183.

The weekly turnover on the prime bourse stood at Tk 22.43 billion, down from Tk 23.03 billion in the week before.

The daily turnover averaged out at Tk 4.48 billion, 2.61 per cent down from the previous week's average of Tk 4.60 billion.

The market capitalisation of the DSE also fell 1.96 per cent to Tk 3,808 billion on Thursday, from Tk 3,884 billion in the previous week.

Most of the major sectors showed negative performances, with the banking sector posting the highest loss (3.46 per cent), followed by non-bank financial institutions (3.44 per cent), engineering (3.0 per cent), power (2.99 per cent), telecommunications (2.66 per cent) and food (0.73 per cent).

Only pharmaceuticals sector closed higher, gaining 0.74 per cent.

Losers outnumbered the gainers, as out of 355 issues traded, 309 closed lower, 48 ended higher and five issues remained unchanged on the DSE floor in the outgoing week.

United Power dominated the week's turnover chart for the three consecutive weeks, with 2.51 million shares worth nearly Tk 996 billion changing hands during the week.

Reckitt Benckiser was the week's best performer, posting a gain of 18.63 per cent while Global Insurance was the worst loser, shedding 28.70 per cent.

The port city's bourse, Chittagong Stock Exchange (CSE), also ended lower, with its CSE All Share Price Index - CASPI - closing 460 points to settle at 15,580 and the Selective Categories Index - CSCX - shedding 276 points to finish the week at 9,457.

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