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The equity benchmark index failed to sustain its positive momentum this week as investors retreated to the sidelines following a series of earnings reports that fell short of expectations.
The market experienced a sluggish pace throughout the week, with investors showing increased caution amid concerns over proposed tightening of margin loan regulations.
The capital market reform taskforce is considering stricter controls on margin loans as their misuse and insufficient regulation have been a significant drag on the stock market.
This week, trading opened with a sharp fall and the first four trading sessions closed in the red. However, the last session managed to end flat.
DSEX, the key index of the Dhaka Stock Exchange (DSE), finally settled the week more than 53 points or 1.04 per cent lower at 5,113, wiping out all the gains from the previous week.
The blue-chip DS30 index, a group of 30 prominent companies, also dropped 9 points to 1,904 while the DSES index, which represents Shariah-based companies, plunged 28 points to close at 1,134.
In its weekly market review, EBL Securities said the investors mostly observed the market momentum amidst the earnings declarations of the listed companies for the recently ended quarter and proposals for certain market development initiatives by the capital market stakeholders.
The market witnessed lackluster momentum throughout this week with a consecutive losing streak, while the proposed tightening of margin loan regulations induced further caution among investors, said the stockbroker.
However, bargain hunters returned in the final session to take positions on certain stocks in anticipation of short-term gains following favourable earnings calls, providing some cushion to offset the ongoing weaknesses.
Price erosion of selective large-cap stocks such as Renata and Islami Bank, Walton, Kohinoor Chemicals and Orion Pharma dragged the market index down as they jointly accounted for a 40-point fall in the key index.
Renata's stock alone contributed to a 16.7-point fall as its stock price plunged 13 per cent after the drug maker reported a 34-percent drop in profit, reaching Tk 560 million, for the second quarter of FY25.
Islami Bank, which plunged 5.4 per cent this week, contributed a 15-point fall to the key index alone. The bank's stock closed at Tk 43.6 on Thursday. The bank's stock kept falling after its removal from the blue-chip group during the last week's DS30 index rebalancing.
However, shares of underperforming companies, known as junk stocks, continued to surge, signalling potential market manipulation.
Six of the top ten weekly gainers were from 'Z' category stocks, prompting analysts to raise concerns about possible price manipulation.
Khulna Printing & Paper, a non-operational entity, has been dominating the weekly gainers' list for the past few weeks. Its stock price jumped 184 per cent in a month to close at Tk 26.4 on Thursday.
Its factory has been producing nothing since October 2021 as it was suffering from a severe working capital and incurring losses for the past five consecutive years.
Others top weekly gainers from 'Z' category include Delta Spinners (39.1%), Tallu Spinning (21.6%), Prime Textile (15.6%), Global Heavy Chemicals (12.1%) and Khulna Power (8.2%).
The non-performing stocks are significantly beating their industry peers nowadays that are in regular business operation, posting profits and giving dividends to their shareholders.
Turnover, a crucial indicator of the market, also declined to Tk 16.95 billion this week, down from Tk 20.63 billion the previous week.
Consequently, the average daily turnover dropped almost 18 per cent to Tk 3.39 billion, down from Tk 4.12 billion the previous week.
Investors were mostly active in the textile sector, which accounted for 16.5 per cent of the week's total turnover, followed by pharma (15.2 per cent) and banking sector (12 per cent).
Most of the traded stocks saw price erosion, as out of 396 issues traded, 272 closed lower and 98 higher while 26 remained unchanged.
Most sectors saw negative performance. Among the major sectors, non-bank financial institutions saw the highest fall of 4.4 per cent, followed by engineering (3.6 per cent), pharma (3.1 per cent) and banking (0.1 per cent).
On the other hand, telecom, food and power sectors gained 0.8 per cent, 0.6 per cent and 0.3 per cent respectively. ADN Telecom was the most-traded stock with shares worth Tk 526 million changing hands, followed by Agni Systems, Khan Brothers, BRAC Bank and Dragon Sweater.
The Chittagong Stock Exchange (CSE) also ended lower this week, with CSE All Share Price Index (CASPI) losing 155 points to settle at 14,294 and its Selective Categories Index (CSCX) shedding 97 points to close at 8,700.
The port-city bourse traded 21.57 million shares and mutual fund units, with a turnover value of Tk 720 million.