Weekly Market Review: Stocks extend gains on ICB fund boost

The benchmark equity index of the Dhaka Stock Exchange (DSE) advanced for a second consecutive week, buoyed largely by fresh liquidity support from the Investment Corporation of Bangladesh (ICB).

The state-run investment bank began deploying funds into the market this week after receiving Tk 10 billion in government loans to ease its liquidity strain and shore up market stability. The loan carries a 5 percent interest rate with a 10-year tenure and a one-year grace period.

"We have started injecting the fund into the market, particularly into fundamentally strong stocks, from the amount received from the government," Prof Abu Ahmed, chairman of ICB, told the FE on Monday.

Market analysts said ICB's intervention, coupled with renewed bargain hunting, helped lift investor confidence. Buyers returned to battered stocks seeking short-term gains, despite lingering political uncertainties.

Akramul Alam, head of research at Royal Capital, said general investors, including institutional ones, rushed to put fresh funds into blue-chip stocks as they came down to attractive valuations after a recent correction.

Speculation about a favourable outcome in the ongoing legal proceedings concerning the newly enacted margin rules also appeared to provide support to the market, he said.

News of ICB's market-supportive actions further boosted investor sentiment on the trading floor, prompting opportunistic traders to re-enter the market.

With the renewed momentum, the benchmark index has moved back toward the 5,000pointafter three weeks, defying the broader uncertainty surrounding market direction.

This week, three sessions ended higher while two others closed lower amid improved trading activities.

Finally, the prime DSEX index settled the week 159 points or 3.27 per cent higher at 5,028. The index recovered a total of 325 points in the past two consecutive weeks.

The blue-chip DS30 index, a group of 30 prominent companies, also surged 56 points to close at 1,934 while the DSES index, which represents Shariah-based companies, gained 38 points to 1,057.

EBL Securities, in its weekly market analysis, said stocks extended their recovery streak, defying the prevailing uncertainties surrounding the market's momentum, as opportunistic investors returned to the market and sought positions in a handful of stocks that they deemed attractive at current price levels.

"The market sentiment was buoyed by media reports on long-awaited central bank funding support for ICB, which contributed to broader market optimism," said the stockbroker.

Additionally, some clarity on the political front, supported by expectations of an upcoming announcement of the tentative election schedule, helped reinforce investors' confidence in the market's near-term outlook, it explained.

Price hike of blue-chip stocks, including Beximco Pharma, Square Pharma, Renata, Al-Arafah Islami Bank and Islami Bank Bangladesh, largely contributed to the market index surge. These five stocks accounted for a 30-point rise in the DSEX.

The market liquidity also improved as the total turnover stood at Tk 26.25 billion as against Tk 19.88 billion in the week before.

Accordingly, the average daily turnover stood at Tk 5.25 billion, up 32 per cent from the previous week's average turnover of Tk 3.97 billion.

Investors were mostly active in the engineering sector, which accounted for 13.3 per cent of the week's total turnover, followed by pharma (12.5 per cent) and textile sector (12 per cent).

Gainers outnumbered the losers, as out of 379 issues traded, 335 saw price surge while 32 others ended lower and 12 issues remained unchanged on the DSE floor.

All the major sectors showed positive performance. The non-bank financial institutions posted the highest gain of 4.1 per cent, followed by engineering, food, pharma, banking and telecom.

Khan Brothers PP Woven Bag Industries became the most-traded stocks, with shares worth Tk 938 million changing hands, closely followed by Shahjibazar Power, Orion Infusion, Simtex Industries and Anwar Galvanizing.

The Chittagong Stock Exchange also extended its winning streak, with its All Shares Price Index (CASPI) rising 395 points to close at 14,037, while the Selective Categories Index (CSCX) rose 224 points to 8,642.

The port city bourse traded 26.51 million shares and mutual fund units with turnover value of Tk 1.11 billion.

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