Stocks rebound as bargain hunters drive market recovery

Stocks saw a strong rebound this week, paring all the losses from the previous week, as investors looked for bargains among beaten-down stocks in anticipation of short-term gain.

Market analysts said the market recovery was largely supported by the state-run Investment Corporation of Bangladesh (ICB) as it began injecting funds into the market after receiving capital last week.

The country's largest investment bank received Tk 30 billion low-cost fund from the government to support the ailing stock market as well as pay-off high-cost debts, which boosted the investor confidence to some extent.

The central bank disbursed the fund at an interest rate of 4 per cent for a period of 18 months after the government had provided sovereign guarantee against the fund to help the ailing market.

"We have already started injecting the fund into the market, particularly in good stocks," Md Abul Hossain, managing director of the ICB, said early this week.

As a result, the market opened with a dominant buy pressure and three trading days of the week ended higher, out of four. The market remained closed on Monday on the occasion of Victory Day.

DSEX, the broad index of the Dhaka Stock Exchange, surged 116 points or 2.27 per cent to settle the week at 5,221, after shedding 91 points in the week before.

Price hike of selective large-cap stocks, such as Square Pharmaceuticals, Islami Bank, Beacon Pharma, Grameenphone and Pubali Bank, largely supported the overall market recovery as they jointly accounted for more than half of the weekly gains for the index.

Square Pharma is considered one of the best performing blue-chip stocks, with an excellent reputation, soared more than 5 per cent this week, contributing 26.6-point gain alone.

Islami Bank also contributed 14.4-point rise to the key index as its stock surged more than 4 per cent to close at Tk 47.6 on Thursday.

Beacon Pharma, another blue chip stock, also contributed almost 12-point gain of the key index as its stock jumped 15.6 per cent, becoming the week's fourth highest gainer.

The blue-chip DS30 index, a group of 30 prominent companies, rose 56 points to 1,938 while the DSES index, which represents Shariah-based companies, gained 27 points to close at 1,167.

In its weekly analysis, EBL Securities said stocks returned to positive territory this week as bargain hunters showed buying interest in the beaten-down scrips since the market has undergone significant correction last week.

However, cautious investors are observant of the sustainability of the market's short-lived upbeat vibe in the absence of any major trigger for the market to bounce back from its current volatile state, said the stockbroker.

Turnover, a crucial indicator of the market, stood at Tk 14.92 billion this week, down from Tk 16.1 billion in the previous week, as this week saw four trading days instead of regular five days.

However, the average daily turnover increased by nearly 16 per cent, reaching Tk 3.73 billion, up from Tk 3.22 billion the previous week.

Investors were mostly active in the pharma sector, which accounted for 24.5 per cent of the week's total turnover, followed by textile (11.6 per cent) and banking sector (9.3 per cent).

Most of the traded stocks saw price appreciation, as out of 367 issues traded, 172 closed higher, 168 lower, and 27 remained unchanged.

The large-cap sectors saw positive performance. The telecom experienced the highest gain of 4.7 per cent followed by pharma with 3.7 per cent, banking 1.45 per cent, food 1.11 per cent, engineering, 1.01 per cent and power 0.85 per cent.

Square Pharma was the most-traded stock with shares worth Tk 876 million changing hands, followed by Orion Infusion, Acme Laboratories, Bangladesh Shipping Corporation, and Robi Axiata.

The Chittagong Stock Exchange (CSE) also ended higher, with CSE All Share Price Index (CASPI) rising 218 points to settle at 14,522 and its Selective Categories Index (CSCX) soaring 141 points to 8,843.

The port-city bourse traded 14.81 million shares and mutual fund units with a turnover value of Tk 459 million.

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