DSEX advances for second session as investors pile into banks

The prime bourse gained for the second consecutive day on Tuesday, backed mainly by banks, many of which reported hefty losses for the latest quarters.

The Dhaka Stock Exchange (DSE) opened the day's session on a positive note and maintained the trend until closure. At the end of the session, the DSEX closed at 5,415 points, up 0.48 per cent or 26 points.

According to a market review by EBL Securities, the market stayed upbeat throughout the session as bargain hunters turned active on the trading floor and opted to take positions in major stocks.

It also said cautious selling persisted as many investors remained watchful ahead of the upcoming earnings season.

Of the day's top 10 index drivers, nine were bank stocks, adding 13.59 points to the broad index of the Dhaka exchange.

Ironically, they included lenders undergoing a merger process. Those banks had experienced steep corrections until August 24 on the back of concerns over the fate of investments in their stocks post-merger. Then the stocks made a turnaround and continued an uphill climb until Tuesday.

Of them, Social Islami Bank Ltd (SIBL) saw a 42 per cent appreciation in the last four sessions to Tk 4.40 per share on the DSE on Tuesday.

Talking to The FE, several market operators expressed surprise at such an appreciation of bank stocks, given that the securities regulator has yet to announce any measure to protect the interest of general shareholders of the five troubled Islamic banks destined for merger.

General investors are still in the dark about whether they will be compensated or offered shares of the merged entity.

"In this situation, the mass-scale participation in those banks may be either speculative or aimed at short-term capital gains, considering the significantly lower prices," said Selim Afzal Shawon, head of research at BRAC EPL Stock Brokerage.

The central bank's decision to appoint administrators in the five banks might also be a reason behind the stock price appreciation, he added.

Apart from the five Islamic banks, some other loss-making financial institutions also witnessed remarkable price gains in the secondary market. They include National Bank, ICB Islamic Bank, and AB Bank.

Market operators said those banks might have appreciated because of a peer-group impact.

The majority of the banks that topped the charts of top gainers and index drivers endured significant losses last year.

Of them, SIBL reported a loss of Tk 1.01 billion for 2024.

While the banking sector secured dominance in the market rally on Tuesday, many blue-chip, well-performing companies, including Square Pharmaceuticals, closed in the red on the premier bourse.

As a result, the DS30 index comprising blue-chip companies declined 0.13 per cent, or 2.79 points.

Of the 397 securities traded on Tuesday, 207 advanced, 130 declined, and 60 remained unchanged.

The DSE posted a turnover of Tk 6.96 billion, up 16 per cent from the previous session.

GQ Ball Pen was the day's worst loser after declining 7.1 per cent to close at Tk 556.90 per share.

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