WEEKLY MARKET REVIEW: Bargain buying snaps three-week market downturn

The benchmark equity index rebounded this week, paring more than half of the sharp losses suffered in the previous week and snapping a three-week losing streak, as bargain hunters showed renewed buying interest in beaten-down stocks.

Analysts noted that the market showed signs of recovery momentum, as opportunistic investors moved to capitalise on stocks they deemed to be trading at attractive valuations following recent sharp corrections. The market had been on the downtrend since September 07.

In addition, speculation surrounding a favourable outcome in the ongoing legal proceedings regarding the newly enacted margin rules seemed to provide further support to the market, leading to reduced sale pressure.

EBL Securities, in its weekly market analysis, said, "The bargain hunters capitalised on the recent sharp market correction by accumulating beaten-down stocks amid market-wide speculation of a possible relaxation in the forthcoming verdict on margin rules,"

However, broader investor participation has yet to rebound as major investors preferred to remain watchful amid persistent concerns over uncertain market momentum ahead of national election, it added.

"Nevertheless, the market's recovery lost some steam in the final session as cautious investors locked in recent gains and adopted a wait-and-see stance ahead of the impending legal proceedings on margin rules," said the stockbroker.

This week, the first four trading sessions saw an upward trajectory, recovering 198 points, while the last one shed 32 points on the Dhaka Stock Exchange (DSE).

The prime DSEX index finally settled the week 166 points or 3.54 per cent higher at 4,869. The index had lost 409 points in the past three consecutive weeks.

The blue-chip DS30 index, a group of 30 prominent companies, also surged 26 points to close at 1,878 while the DSES index, which represents Shariah-based companies, gained 41 points to 1,018.

Despite the market rebounded this week, prevailing political worries, banking sector uncertainties, particularly the ongoing merger of five Islamic banks, and impending legal proceedings on margin rules remained a major concern among investors, said a leading stockbroker.

Price hike of selective stocks, including National Bank, Islami Bank, Walton, BAT Bangladesh, ands Al-Arafah Islami Bank, largely contributed to the market index surge. These five stocks accounted for a 33-point rise in the DSEX.

However, there is also a cause for concern, as shares of junk stocks also continued to go up, with the 'Z' category dominating the top 10 weekly gainers' chart, indicating potential market manipulation.

A stock is labelled as junk when the company's commercial production has been shut for six months in a row, or failed to arrange annual general meetings on time, or failed to provide dividends to shareholders for two consecutive years.

Junk stocks -- Khulna Printing, International Leasing, Bangladesh Industrial Finance Corporation, National Bank, Fareast Finance, Peoples Leasing, Malek Spinning Mills and Hamid Fabrics -- were the weeks' top 10 gainers, soaring between 40 and 51.8 per cent this week.

The market liquidity continued to remain subdued and the total turnover stood at Tk 19.88 billion as against Tk 17.72 billion in the week before.

Accordingly, the average daily turnover stood at Tk 3.97 billion, up 12 per cent from the previous week's average turnover of Tk 3.54 billion.

Investors were mostly active in the engineering sector, which accounted for 12.4 per cent of the week's total turnover, followed by pharma (11.9 per cent) and textile sector (11.2 per cent).

Gainers outnumbered the losers, as out of 369 issues traded, 347 saw price surge while 18 others ended lower and 4 issues remained unchanged on the DSE floor.

All the major sectors showed positive performance. The non-bank financial institutions posted the highest gain of 9.7 per cent, followed by engineering, power, banking, food and pharma.

Lovello Ice-cream became the most-traded stocks, with shares worth Tk 585 million changing hands, closely followed by Anwar Galvanizing, Summit Alliance Port, Square Pharma and Orion Infusion.

The Chittagong Stock Exchange (CSE) also rebounded, with its All Shares Price Index (CASPI) rising 241 points to close at 13,642, while the Selective Categories Index (CSCX) rose 100 points to 8,418.

The CSE traded 27.62 million shares and mutual fund units with turnover value of Tk 468 million.

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