Weekly analysis: Budget makes investors' hope a reality

Stocks extended the gaining streak into the third consecutive week that ended on Thursday as investors collected large-cap shares in the run-up to the budget amid high expectation.

Market analysts said the stocks kept gaining as budgetary hopes boosted the market sentiment.

The national budget for the upcoming fiscal year (FY), 2019-20, was unveiled on Thursday.

In the budget, Finance Minister AHM Mustafa Kamal has proposed an array of incentives for the capital market, including an increase in the tax-free dividend income threshold-up to Tk 50,000 from the existing limit of Tk 25,000.

The finance minister also proposed to remove the double taxation of dividends from listed companies.

"This decision may encourage more small investors to invest in the capital market," commented EBL Securities.

Experts and stakeholders also hailed the proposed incentives.

Terming the proposed budget market-friendly, a leading broker said the incentives would help investors get back their confidence in the coming days.

The Dhaka Stock Exchange (DSE) also hailed the proposed budget as market-friendly, saying it would benefit the investors as well as the economy of the country.

During the week, the DSE saw five trading days as usual. Of them, four sessions closed higher but one session saw mild correction.

Week on week, the prime index, the DSEX, settled 96.56 points or 1.80 per cent higher at 5,474.

Two other indices also ended higher. The DS30 index, comprising blue chips, advanced 29.70 points to finish at 1,918 and the DSE Shariah Index rose 29.80 points to close at 1,244.

"Such gain in the market indices was backed by considerable gain in large-cap stocks from major sectors like food, engineering pharmaceuticals," commented the City Bank Capital Resources.

The total weekly turnover stood at Tk 24.63 billion, up from Tk 18.41 billion in the week before.

The daily turnover averaged out at Tk 4.92 billion, registering an increase of 34 per cent over the previous week's daily average of Tk 3.68 billion.

The Sheltech Brokerage said the index gained substantially amid investors' optimism about the national budget.

According to the International Leasing Securities, buoyancy in large-cap sectors like insurance, food, engineering, power, pharma, telecoms and non-bank financial institutions pushed the prime index higher.

Most major sectors posted gains, with food sector logging the highest gain of 5.10 per cent, followed by engineering (3.30 per cent), pharmaceuticals (2.0 per cent), power (1.90 per cent), telecoms (1.80 per cent) and financial institutions (1.60 per cent).

Only banking sector saw 0.10 per cent correction.

The market capitalisation of the DSE also rose 2.02 per cent to Tk 4,021 billion on Thursday, from Tk 3,941 billion in the week before.

Gainers outnumbered the losers, as out of 353 issues traded, 260 closed higher, 70 ended lower and 23 issues remained unchanged on the DSE floor.

The United Power dominated the turnover chart, with 2.67 million shares worth Tk 968 million changing hands. The company accounted for 3.93 per cent of the week's total turnover.

The other turnover leaders were BBS Cables, JMI Syringes, National Life Insurance and Eastern Housing.

The Global Insurance Company was the week's best performer, posting a gain of 31.31 per cent while Mercantile Bank was the biggest loser, plunging 13.89 per cent.

The port city bourse, Chittagong Stock Exchange (CSE), also ended higher, with its CSE All Share Price Index-CASPI-soaring 389 points to settle at 16,764 points and the Selective Categories Index-CSCX-rising 241 to finish at 10,157.

A new issue - Silco Pharmaceuticals - made its trading debut on Thursday. The new comer's share price soared 151 per cent to close at Tk 25.10 on the debut trading day, from the issue price of 10 each.

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