Dhaka stocks reverse long losing streak

Stocks were marginally higher last week, snapping the five-week losing spell, driven by the government's move to ease the ongoing liquidity crunch.

Analysts said the market edged higher as optimistic investors showed their buying appetite in the closing session of the week encouraged by the government's move to mitigate the ongoing liquidity shortage.

The acute liquidity shortage in the financial market has been haunting stock investors for more than two months, causing the core index to slump by about 443 points.

Following the prevailing liquidity crisis, the government is set to relax policy for allowing its agencies to deposit more funds with the private commercial banks to help them mitigate the liquidity crisis.

Under the proposed relaxation, the state-owned enterprises will be allowed to deposit 40 per cent of their funds with the private commercial banks and the remaining 60 per cent with the public banks.

Currently, the state agencies are allowed to deposit only 25 per cent of their funds with the private banks and 75 per cent with the public banks.

"The investors became optimistic following the government's move which may ease the ongoing liquidity shortage to some extent," said a stockbroker.

Another stockbroker said institutional investors helped the index to end higher on Thursday, the last working day of the first quarter of this calendar year, as the day's share price was crucial for the earnings per share of banks and financial institutions.

"The recent steep correction took many fundamental issues to lucrative price level which also encouraged many investors to take position," he said.

The week featured four trading sessions as the market remained closed Monday due to public holiday. Of them, first three sessions ended lower while the last session rebounded strongly.

Week-on-week, DSEX, the prime index of the Dhaka Stock Exchange (DSE), went up by 16.86 points or 0.30 per cent to settle at 5,597.

"The government's measure to mitigate the ongoing liquidity crunch by changing policy regarding state-owned enterprises' deposit may have contributed to the upward movement of index," commented LankaBangla Securities, in its weekly analysis.

Financial stocks showed positive movement last week with banking sector increasing by 0.97 per cent and non-bank financial institutions by 0.63 per cent, said the stockbroker.

According to International Leasing Securities, the optimistic investors showed their buying appetite for some large-cap stocks amid optimism.

"The optimistic drive in the last session was mainly initiated by the news that to alleviate the ongoing liquidity crisis government might ease the policy and allow its agencies to deposit more funds in the private commercial banks," the stockbroker said.

The stockbroker noted that the hopeful investors took position on food, bank and financial institutions while some of the investors liquidated their position from telecom, textile, fuel & power and sectors' stocks.

The DS30 index, comprising blue chips, also gained 23.75 points to close at 2,106. However, the DSES (Shariah) index shed 7.36 points to settle at 1,314.

The port city bourse Chittagong Stock Exchange (CSE), however, stayed down with the CSE All Share Price Index - CASPI - losing 24 points to settle at 17,215 points and Selective Categories Index - CSCX -falling 11 points to end at 10,403.

Turnover, the crucial indicator of the market, stood at Tk 12.84 billion against Tk 17.69 billion in the previous week. The last week saw four trading sessions instead of five at the CSE also.

The daily turnover averaged Tk 3.21 billion, more than 27 per cent lower than the previous week's average of Tk 3.54 billion.

The engineering sector dominated the turnover chart, capturing 18 per cent of the week's total transaction, followed by pharmaceuticals with 14 per cent and textile 12 per cent.

The market capitalisation of the DSE fell 0.18 per cent as it was Tk 3,924 billion on the opening day of the week while it came down to Tk 3,917 billion on Thursday.

The losers took a strong lead over the gainers as out of 340 issues traded, 202 closed lower, 109 higher and 29 issues remained unchanged on the DSE floor.

Grameenphone topped the turnover chart with 1.11 million shares worth nearly Tk 516 million changing hands, followed by Square Pharmaceuticals with Tk 449 million, BRAC Bank Tk 400 million, Merchant Bank Tk 338 million and Salvo Chemical Industries Tk 284 million.

Northern Jute Manufacturing Company was the week's best performer, posting a gain of 12.44 per cent while the newly listed Queen South Textile was the week's worst loser with 22.57 per cent.

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