Stocks rally for seventh week on signs of economic recovery

Stocks gained for the seventh consecutive week, with the benchmark index hitting a 10-month high, as buoyant investors continued to snap up fundamenatlly strong shares riding on high hopes.

The buying spree persisted throughout the week despite the lingering uncertainty over the resolution of US tariff-related issues.

Market analysts said investors' sentiment remained resilient, bolstered by improving macroeconomic indicators, including a drop in inflation and the strengthening of the local currency against the US dollar.

Moreover, as the yield rates on government securities are showing a declining trend over the past few weeks, funds are being diverted to the equity market from the money market.

The interest rate of 10-year tenure treasury bonds saw a sharp drop of 187 basis points last week to 10.48 per cent, which was close to 13 per cent just a few months ago.

Besides, lowering the reverse repo rate by 50 basis points last week and growing expectations of an imminent policy rate cut helped boost the investor confidence.

As the interest rate is falling, high-net-worth investors are parking their funds into lucrative stocks, said a leading stockbroker.

Fundamentally strong and oversold stocks remained investors' focus, driven by attractive valuations, leading to the highest single-week gain until now this year.

Due to strong buying pressure, all five trading sessions closed higher with robust investors' participation throughout the week.

DSEX, the key index of the Dhaka Stock Exchange (DSE), finally settled the week 260 points or 5.06 per cent higher at 5,392, the highest level in 10 months since October 9 last year.

The DSEX regained around 754 points in the past seven straight weeks while the market capitalisation surged by Tk 575 billion during the time to Tk 7.08 trillion.

In its weekly analysis, EBL Securities said the investors' resilient positive sentiment reflected strong buying interest in selective blue-chip scrips amid a shift in liquidity toward equities, prompted by declining yields on government fixed-income securities.

The bullish enthusiasm sparked across the trading floor from the onset of the week, further stimulated by anticipation surrounding upcoming quarterly earnings announcements, said the stockbroker.

This week, price hikes of fundamentally strong stocks such as BRAC Bank, BAT Bangladesh, Square Pharma, Walton, Islami Bank, Prime Bank and Grameenphone pulled the market index up, jointly contributing almost 200-point rise in the DSEX.

The blue-chip DS30 index, a group of 30 prominent companies, jumped 153 points to 2,089 and the DSES Index, which represents Shariah-based companies, surged 53 points to 1,172.

The fourth session of the week also saw this year's highest single-day turnover of Tk 9.86 billion.

As investor participation surged, the total turnover reached Tk 42.97 billion this week, up from Tk 34.08 billion the previous week.

accordingly, the average daily turnover jumped to Tk 8.60 billion, 26 per cent up from the previous week's figure of Tk 6.81 billion.

The banking sector kept its dominance in the weekly turnover chart, accounting for 19 per cent of the week's total turnover, followed by the pharma sector (14.8 per cent) and engineering sector (8.7 per cent).

The market upbeat vibe continued to lure the investors to all major sectors, particularly in the food & allied sector, soaring 8.4 per cent, riding on sector heavyweights BAT Bangladesh.

It was followed by cement, non-bank financial institutions, banking, telecom, power and engineering.

Most of the traded issues saw price appreciation, as out of 394 issued traded, 215 closed higher, 144 ended lower and 35 issues remained unchanged on the DSE trading floor.

BRAC Bank was the most-traded stock with shares worth Tk 1.34 billion changing hands, followed by Bangladesh Shipping Corporation, BAT Bangladesh and Khan Brothers PP Woven Bag Industries.

The Chittagong Stock Exchange also ended sharply higher, with its All Share Price Index (CASPI) soaring 684 points to 15,013, while the Selective Categories Index (CSCX) jumped 450 points to close at 9,194 points.

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