Stocks rebound from steepest drop, but sentiment remains cautious

The benchmark index of the Dhaka Stock Exchange rebounded strongly on Monday, a day after posting its largest single-day drop in six years, as investors returned to buy undervalued blue-chip stocks, although overall sentiment remained cautious amid escalating Middle East conflict.

Market analysts said bargain hunters stepped in after prices of many fundamentally strong companies fell to attractive levels during the recent correction.

The prime index of the DSE gained 132 points on Monday after it had lost about 592 points since the US and Israel launched strikes on Iran on February 28.

"Many fundamentally strong stocks fell to lucrative price levels after the recent sharp correction, which attracted buyers," said Akramul Alam, head of research at Royal Capital.

Institutional investors also increased exposure to well-performing banking shares as valuations became more attractive, he added.

"Bargain hunters seized opportunities in oversold stocks in anticipation of quick gains," Alam said.

Meanwhile, Bangladesh Bank raised the prior-approval threshold for foreign investors to repatriate capital to Tk 1 billion from Tk 100 million, aligning the rules with international practices to further liberalise capital outflows.Bangladesh travel guide

"This master circular reflects Bangladesh Bank's ongoing commitment to creating a more investor-friendly regulatory environment," the central bank said in a circular issued on Sunday.

The policy change also encouraged foreign investors to channel fresh funds into undervalued stocks, market participants said.

Despite a mild pullback at the opening due to profit-booking sell-offs, the broad index ultimately closed higher, driven by gains in blue-chip stocks.

The benchmark DSEX index of the Dhaka Stock Exchange finally surged 132 points, or 2.64 per cent, to close at 5,141. The index lost 232 points in the previous session.

In its regular market analysis, EBL Securities said the market indices maintained an upbeat trajectory, supported by broad-based price appreciation across major stocks.

However, many investors remained cautious and stayed on the sidelines amid uncertainty over the geopolitical outlook and the absence of any clear progress toward a ceasefire in the conflict, the stockbroker noted.

The blue-chip DS30 index gained 56 points to 1,976, while the Shariah-based DSES index rose 22 points to 1,035.

The blue-chip DS30 index, a group of 30 prominent companies, also rose 56 points to close at 1,976 the DSES index, which represents Shariah-based companies, surged 22 points to 1,035.

Price surge of blue-chip stocks, including Islami Bank, BRAC Bank, City Bank, Pubali Bank and Beximco Pharma, largely contributed to the market index rise. These five stocks accounted for a 59-point gain in the DSEX.

Islami Bank alone accounted for a 23-point gain in the DSEX as its share jumped 9.9 per cent after the bank said its board had approved a US firm as a strategic investor in its subsidiary mCash.

The proposed strategic investment is expected to strengthen the capital base of mCash and accelerate the expansion of digital financial services under the mobile financial services (MFS) platform, the bank said.Investment banking services

Following the news, Islami Bank also the day's top gainer.

Market liquidity, however, remained weak. Turnover on the DSE fell to Tk 4.14 billion, registering a 32 per cent decline from Tk 5.23 billion in the previous session.

The banking sector accounted for the largest share of trading at around 26 per cent of total turnover, followed by pharmaceuticals at 19 per cent and textiles at 9 per cent.

Gainers outnumbered the losers, as out of 388 issues traded, 351 saw price jump while 17 others ended lower and 20 issues remained unchanged on the DSE floor.

All major sectors posted gain. The banking sector booked the highest gain of 4.54 per cent followed by non-bank financial institutions, food & allied, pharmaceutical, fuel & power, engineering and telecom.

Orion Infusion became the most-traded stocks, with shares worth Tk 263 million changing hands, closely followed by City Bank, BRAC Bank, Robi Axiata and Square Pharma.

The Chittagong Stock Exchange also rebounded, with its All Shares Price Index (CASPI) gaining 82 points to close at 14,487, while the Selective Categories Index (CSCX) rose 52 points to 8,857.

The port city bourse traded 9.22 million shares and mutual fund units with turnover value of Tk 486 million.

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