Stocks extend losses for fourth week

DSEX erodes 330 points in four weeks

Weekly analysis

Babul Barman | Saturday, 17 March 2018

Stocks extended the losing streak for the fourth straight week that ended Thursday as investors continued their selling binge amid persistent liquidity crisis.

Brokers said the market saw yet another bearish week as retail investors were reluctant to make fresh investment while the institutional investors could not support the market more due to ongoing liquidity crisis.

"Investors remain very cautious as the persistent liquidity crisis coupled with uncertainty over the Dhaka bourse's share sales to strategic partner continues," said an analyst.

However, the four-member panel of the Bangladesh Securities and Exchange Commission (BSEC) Thursday submitted its report to the commission after looking into the Chinese Consortium's proposal.

The regulator will take the final decision regarding accepting or rejecting the Chinese Consortium as strategic partner of the Dhaka bourse.

Identifying liquidity crisis as a key reason for the continuous market fall, the market operators Tuesday made a set of demands including redefining of banks' capital market exposure to help revive the capital market.

The week witnessed five trading sessions as usual. Of them, first three sessions eroded 204 points while last two recovered about 97 points.

Although the market index recovered about 97 points in the last two sessions of the week following the news, it failed to take the market in green territory.

Week-on-week, DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 107 points or 1.84 per cent to settle at 5,720.

"Investors' confidence remains low with very little buying appetite amid the ongoing liquidity crisis which does not seem to be ended soon," commented City Bank Capital Resources, in its weekly market analysis.

In the past four consecutive weeks, DSEX lost an aggregate 330 points or 5.40 per cent.

The merchant bank noted that to recover from the crisis DSE Brokers Association of Bangladesh (DBA) demanded Bangladesh Bank (BB) to revise the exposure limit of financial institutions in the capital market.

Two other indices of the premier bourse also ended lower. The DS30 index, comprising blue chips, fell 27.72 points to finish at 2,116 and DSES (Shariah) index slumped 24.25 points to settle at 1,349.

The port city bourse Chittagong Stock Exchange (CSE) also finished lower with the CSE All Share Price Index - CASPI - shedding 345 points to settle at 17,655 and Selective Categories Index - CSCX -falling 206 points to end at 10,661.

Turnover, the crucial indicator of the market, came down to Tk 13.80 billion which was Tk 18.60 billion in the week before.

The daily turnover averaged Tk 2.76 billion, which was nearly 26 per cent lower than the previous week's average of Tk 3.72 billion.

Block trade contributed 5.30 per cent to the week's total turnover, where stocks like Grameenphone, Brac Bank, Singer BD, Square Pharma, Mercantile Bank and City Bank dominated the block trade board.

The engineering sector dominated the turnover chart, capturing 18 per cent of the week's total turnover, followed by pharmaceuticals with 14 per cent and textile 12 per cent.

According to International Leasing Securities, the market witnessed price correction for the four weeks amid liquidity crisis and concerned trading behavior of the investors.

The stockbroker noted that ongoing liquidity crisis in the country's financial sector and complexity over the Dhaka bourse's share sales to strategic partner fueled up the risk-averse investors' selling spree.

Financial institution, textile, engineering, bank, fuel & power and telecom sectors observed selling pressure in the week.

The market capitalisation of the DSE also fell 1.37 per cent as it was Tk 4,063 billion on opening day of the week while it stood at Tk 4,008 billion on Thursday.

The losers took a strong lead over the gainers as out of 340 issues traded, 270 closed lower, 54 lower and 16 remained unchanged on the DSE floor.

Monno Ceramic Industries dominated the turnover chart for the two consecutive weeks with 4.68 million shares worth nearly Tk 650 million changing hands, followed by newly listed Queen South Textile with Tk 366 million, IFAD Autos Tk 355 million, Brac Bank Tk 333 million and Mercantile Bank Tk 292 million.

The mutual funds dominated the week's gainer chart with CAPM IBBL Islamic Mutual Fund was the week's best performer, posting a gain of 24.51 per cent while Shympur Sugar Mills was the week's worst loser, losing 14 per cent.

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