Stocks snap two-week gaining streak as political tensions worry investors

Stocks ended in the red in the outgoing week to Thursday, snapping the two-week gaining streak, as investor sentiment took a hit amid mounting political uncertainties surrounding the upcoming national election.

As investors opted to realise their short-term gains, some sector-specific stocks, such as Sea Pearl Beach Resort & Spa Limited, Square Pharmaceuticals, Unique Hotel and Resorts, Alhaj Textile Mills Ltd, and Crystal Insurance Company Limited dragged down the market.

While the DSEX, the benchmark equity index of the Dhaka Stock Exchange (DSE), settled the week at 13.2 points or 0.2 per cent lower at 6,276, these five stocks together led to a 12.3-point drop of the index, according to the weekly analysis of EBL Securities.

Two other indices also closed lower. The DS30 Index, which consists of blue-chip companies, dropped 4.89 points to close at 2,136 and the DSES index, which represents Shariah-based companies, fell 1.06 points to 1,362.51.

The total turnover of the week reached Tk 18.35 billion, down from Tk 25.03 billion in the week before. And the average daily turnover stood at Tk 4.59 billion, which was 8.34 per cent lower than in the previous week.

While the prevailing floor price discourages investors from injecting fresh funds, the higher policy rate will contribute to slowing down the money flow to the stock market, said a stockbroker, declining to be named.

Higher interest rates are generally a negative factor for the stock market as funds move from stock market to banks as investors see them as safer investment options, he explained.

Besides, the cautious investors preferred to liquidate their holdings and stay on the sidelines owing to shaky confidence stemming from intensifying macroeconomic concerns and rising political tensions.

This week featured four trading days as Tuesday was a public holiday on the occasion of Durga Puja. Of them, the two sessions suffered losses while two others closed marginally higher.

"Investors were active on both sides of the trading fence, as opportunistic investors showed buying interest in specific issues in light of the earnings and dividend declarations for the recently ended fiscal year." said EBL Securities.

The general insurance sector kept its dominance on the turnover list, capturing 18.9 per cent of the week's total turnover, followed by food (16.7 per cent) and pharma (12 per cent).

Most of the sectors saw price fall with the travel & leisure sector losing 5.90 per cent, followed by general insurance, Jute and textile sectors.

Also, most of the traded stocks saw price erosion. Of 371 issues traded, 102 declined and 53 gained while 216 issues remained unchanged on the DSE trading floor.

Emerald Oil Industries Limited was the most-traded stock with shares worth Tk 725.85 million changing hands, followed by Sea Pearl Beach Resort & Spa Limited, Sonali Aansh Industries Limited, Fu Wang Food Ltd. and Gemini Sea Food PLC.

Capitec Grameen Bank Growth Fund was the week's top gainer, surging 45.11 per cent while Crystal Insurance Company Limited became the worst loser, shedding 18.10 per cent.

The Chittagong Stock Exchange (CSE), however, ended marginally higher, with the CSE All Share Price Index (CASPI) gaining 1.37 points to settle at 18,586.69 and the Selective Categories Index (CSCX) shedding 0.83 points to 11,109.8.

The port city's bourse traded 171.40 million shares and mutual fund units with turnover value worth Tk 5,633.43 million.

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