Stocks rebound on back of regulatory measures

The equity benchmark index bounced back in the outgoing week after two weeks of losses, as buoyant investors put fresh bets on shares, riding on renewed optimism spurred by market supportive measures.

This week, the regulator took a series of actions, including reinstating normal lower circuit breakers, lifting the floor price restrictions for four more stocks and freezing 20 more beneficiary owner accounts of influential figures, including former ministers.

Market experts said measures taken by the newly revamped commission helped bolster investor sentiment. As a result, buyers dominated the trading floor after two weeks of subdued activity.

Amid such developments, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), climbed more than 104 points or 1.83 per cent to settle the week at 5,804, after losing 255 points in the past two weeks.

Of the four trading days this week, three sessions saw the market close higher while the other one witnessed moderate correction. The market was closed on August 26 on the occasion of Janmashtami.

Stocks showed signs of recovery as the recent reformation measures taken by the stock market regulator worked as a catalyst to restore investor confidence, said EBL Securities in its weekly analysis.

"The new commission took some supportive actions to bring back discipline to the market, boosting investor confidence," said Akramul Alam, head of research at Royal Capital.

Reinstating the standard circuit breakers was one of the positive moves, he added. "The normalisation of the lower circuit breaker offers market a breathing space and liquidity will improve in the future."

Apart from the regulatory moves, some June-closing stocks attracted investors ahead of dividend declarations, added Mr Alam.

Buyers remained dominant as opportunistic investors targeted specific issues they found attractive at current price levels.

The blue-chip DS30 index, a group of 30 prominent companies, surged 34 points to 2,125 while the DSES index, which represents Shariah-based companies, rose 22 points to 1,241.

The market recovery was largely supported by high market liquidity and price appreciation of selective large-cap stocks such as Olympic Industries, Square Pharmaceuticals, Khan Brothers, BAT Bangladesh and MJL Bangladesh.

These five companies had a significant impact on the index as they jointly accounted for a 34-point rise in the key index.

Total turnover stood at Tk 31.70 billion this week as against Tk 31.22 billion in the week before. Accordingly, the average daily turnover increased to Tk 7.92 billion this week, which was 27 per cent higher than the previous week's average of Tk 6.24 billion in the week before.

Investors were mostly active in the banking sector, which accounted for 24.5 per cent of total weekly turnover, followed by pharmaceuticals (15.7 per cent) and food sector (12.7 per cent).

Overall the participants displayed a portfolio restructuring strategy while many investors rushed to participate in hyped-up insurance sector stocks.

Life insurance and general insurance sectors showed robust performance with a gain of 10.25 per cent and 6.0 per cent respectively.

Out of top ten gainers, six were insurers, led by National Life Insurance and Pragati Insurance that soared 21.5 per cent and 18 per cent respectively.

The gainers took a strong lead over the losers as out of 397 issues traded, 293 advanced and 86 declined while 18 issues remained unchanged.

Most sectors posted gains. Among the large-cap sectors, engineering saw the highest gain of 9.21 per cent, followed by cement, non-bank financial insurance, power and pharma.

BAT Bangladesh became the most-traded, with shares worth Tk 2.78 billion changing hands, closely followed by Olympic Industries, Grameenphone, Renata and Brac Bank.

Khan Brothers PP Woven Bag Industries was the top gainer with a rise of 29 per cent, while Sonali Paper & Board Mills was the top loser, shedding 13.9 per cent.

The Chittagong Stock Exchange also ended higher with its All Shares Price Index (CASPI) soaring 142 points to 16,520, while the Selective Categories Index (CSCX) rose 89 points to 9,954.

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