Market bounces back on strong earnings outlook

The equity benchmark index rebounded this week as bargain hunters renewed their buying appetite for specific stocks amid fresh optimism fuelled by stronger-than-expected earnings reports from some companies.

Buyers remained on the dominant side as investors chased oversold stocks, which they deemed lucrative at the prevailing price levels.

The market's upward momentum was evident throughout the week, with the index closing higher on all five trading days.

DSEX, the key index of the Dhaka Stock Exchange (DSE), finally settled the week more than 66 points or 1.30 per cent higher at 5,179. It shed 53 points the previous week.

The total market-cap of the DSE also surged by Tk 91 billion to Tk 6,739 billion on Thursday as major stock saw price hike.

The investors' buying interest in certain December-ending shares, including banking stocks, ahead of their upcoming corporate declarations, contributed to the market's sustained upbeat vibe, according to an analysis by EBL Securities.

Some key financial indicators, including remittance and exports, continue to show growth while inflation and the yield rates on government securities declined, bolstering investor confidence in the market, according to market operators.

The yields on treasury bills (T-bills) dropped below 11 per cent, showing signs of a fall in banks' deposit and lending rates in the near future.

"Usually, when the yield rate of the government securities falls, the equity market gets a boost," Akramul Alam, head of research at Royal Capital, said, adding that if the T-bond rates came down to single-digit, the market will rise further.

The blue-chip DS30 index, a group of 30 prominent companies, also gained 9 points to 1,913 while the DSES index, which represents Shariah-based companies, rose 14 points to close at 1,148.

Price hike of selective large-cap stocks such as Eastern Bank, Islami Bank, Energypac Power, Premier Bank and Beximco Pharma pulled the market index up as they jointly accounted for a 15-point rise in the key index.

However, shares of underperforming companies, known as junk stocks, continued to surge, raising concerns about potential market manipulation.

Five junk stocks -- Premier Leasing, Phoenix Finance, New Line Clothings, Prime Finance and Padma Life Insurance -- featured in the weekly gainer list this week.

The non-performing stocks are significantly beating their industry peers in the past few weeks that are in regular business operation, posting profits and giving dividends to their shareholders.

Turnover, a crucial indicator of the market, also soared to Tk 21.33 billion this week, up from Tk 16.95 billion the previous week.

Consequently, the average daily turnover jumped almost 26 per cent to Tk 4.26 billion, up from Tk 3.39 billion the previous week.

Investors were mostly active in the banking sector, which accounted for 15 per cent of the week's total turnover, followed by textile (14 per cent) and pharma sector (13 per cent).

Most of the traded stocks saw price hike, as out of 395 issues traded, 265 closed higher and 103 lower while 27 remained unchanged.

Most sectors saw positive performance. Among the major sectors, non-bank financial institutions saw the highest gain of 4.9 per cent, followed by pharma (1.7 per cent), banking (1.3 per cent), engineering (1.3 per cent), telecom (0.8 per cent) and telecom (0.8 per cent).

Beach Hatchery was the most-traded stock with shares worth Tk 805 million changing hands, followed by Grameenphone, City Bank, Midland Bank, and Orion Infusion.

The Chittagong Stock Exchange (CSE) also ended higher this week, with CSE All Share Price Index (CASPI) rising 218 points to settle at 14,512 and its Selective Categories Index (CSCX) soaring 103 points to close at 8,803.

The bourse traded 11.28 million shares and mutual fund units, with a turnover value of Tk 272 million.

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