Stocks pick up steam amid renewed optimism

Stocks rose sharply higher, extending gains for a second straight week with robust market participation, as clarity on the upcoming election roadmap and encouraging macroeconomic indicators bolstered investor sentiment.

Analysts said well-performing stocks remained the focus for investors, driven by attractive valuations and a decline in interest rates on government securities.

The high-net-worth individuals were in a mood to pour fresh funds into selective stocks as many stocks generated short-term returns in the past few weeks.

Meanwhile, the yield rates on government securities continued to decline in the past three months, signalling potential easing of interest rates in the money market.

There is an inverse relation with the government securities' yield rate and equity market. "When the interest rate falls, the equity market gets a boost," said a leading stockbroker.

The Election Commission (EC) has announced the roadmap for the 13th National Parliamentary Election on Thursday, which also boosted investor confidence to some extent, he said.

Looking ahead, investor activity is expected to gradually pick up, driven by ongoing improving macroeconomic indicators, he added.

Of the five trading days, the market closed higher three sessions while two ended lower due to moderate profit-taking sell-off on quick-gaining stocks.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), finally settled the week more than 143 points or 2.66 per cent higher at 5,518 points. The prime index added 168 points in the past two consecutive weeks.

The market-cap gained Tk 102 billion this week on the prime bourse as heavyweight stocks saw price surge.

EBL Securities, in its weekly analysis, said the stock index sustained its bullish momentum, driven by strong investor interest in selective large-cap stocks, particularly within the bank and pharmaceutical sectors.

The blue-chip DS30 index, a group of 30 prominent companies, also gained 67 points to 2,157 while the DSES index, which represents Shariah-based companies, rose 27 points to close at 1,207.

Price hike of selective well-performing stocks such as BRAC Bank, Beacon Pharma, City Bank, Renata, City Bank, and LafargeHolcim largely contributed to the prime index gain, as they jointly accounted for almost 42-point rise in the DSEX.

However, there is also a cause for concern, as shares of some low-performing companies also continued to surge, signalling potential market manipulation.

Two junk stocks -- Progressive Life Insurance and Zahintex Industries -- and four 'B' category stocks featured in the weeks' top 10 gainers' list.

Information Services Network, a B category IT company, emerged as the top gainer, soaring 45.6 per cent even after the company reported a loss of Tk 1.86 million in nine months through March this year.

Market participation remained robust as the total turnover reached Tk 57.30 billion, exceeding Tk 12 billion in two trading sessions this week, as against Tk 45.36 billion in the week before.

Accordingly, the average daily turnover soared to Tk 11.50 billion, up more than 26 per cent from than the previous week's average turnover of Tk 9.07 billion.

Investors were mostly active in the textile sector, which accounted for 14.5 per cent of the week's total turnover, followed by pharma (14.4 per cent) and banking sector (9 per cent).

Gainers took a strong lead over losers, as out of the 396 issues traded, 268 ended higher, 105 closed lower and 23 remained unchanged on the Dhaka bourse.

Major sectors posted gains, with life insurance booking the highest gain of 10.19 per cent, followed by power with 3.75 per cent, pharmaceutical 2.57 per cent, telecom 2.07 per cent, banking 1.71 per cent, engineering 1.48 per cent, and food 1.10 per cent.

City Bank became the most-traded stocks, with shares worth Tk 1.45 billion changing hands, closely followed by Malek Spinning Mills, Bangladesh Shipping Corporation, Sonali Paper and Beximco Pharma.

The Chittagong Stock Exchange also ended higher, with its All Shares Price Index (CASPI) rising 332 points to 15,357, while the Selective Categories Index (CSCX) gained 227 points to 9,445.

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