Weekly market review: Stocks post modest gain as budget unveiled

Stocks posted a marginal gain in the outgoing week as growing tension over the virus scare and the floor price mechanism kept the market almost dull.

Week-on-week, DSEX, the key index of the Dhaka Stock Exchange, went up by 13.92 points or 0.35 per cent to settle at 3,967.

The DSE core index hovered between 3,956 and 3,967 throughout the week as most of the investors were reluctant to make any fresh investment in stocks amid worsening situation of the deadly virus.

Throughout the week, investors were also cautiously waiting for the budget announcements before making any further investment decisions.

Finance Minister AHM Mustafa Kamal unveiled the budget for the FY 2020-21 Thursday allowing undisclosed money to invest in the stock market although investors say such move failed to bring expected response in the past.

The proposed budget has brought no cheers for stock investors, who have been battered by a prolonged slump in indices, but were little-bit happy with the promised measures to develop the country's bond market, said an analyst.

Finance Minister proposed to reduce the corporate tax gap between listed and non-listed companies which he thinks would discourage non-listed firms to go public.

The presence of investors was also thin on the trading floor as the brokerage houses discourage clients for rushing in the houses physically and inspire for executing their trade through internet-based devices due to the ongoing pandemic.

Two other indices also edged higher. The DS30 index, comprising blue chips, advanced 10.26 points to finish at 1,331 and the DSE Shariah Index rose 3.83 points to settle at 919.

The week's total turnover on the DSE stood at Tk 3.54 billion, down from Tk 6.91 billion in the week before.

The daily turnover averaged only Tk 708 million, which was 49 per cent lower than the previous week's average of Tk 1.38 billion.

Market operators said lack of institutional buyers coupled with the current floor price limitation is preventing many investors from buying and selling shares, bringing the turnover to a record low.

"Under the existing system the buyers have not enough scope to purchase securities at their desired prices," said a merchant banker.

He noted that investors are keeping their hands off to see how the market behaves after the regulator withdraws the floor price.

The stock market regulator imposed the floor price on March 19 for all stocks on the basis of average price of last five days to stop the massive fall of the index amid the virus scare.

The participation of investors dropped significantly, as they are in a vulnerable position due to ongoing Covid-19 crisis and hence adopting a wait-and-see policy, said a leading broker.

According to EBL Securities, investors fear further economic contraction and lower earnings of the listed companies due to the backdrop of Covid-19 crisis which fuelled indices downturn.

Most of the shares were stuck at the trading floor due to floor price limitation and very few buyers came and picked some of the offered shares.

Of the traded issues, 289 remained unchanged while only 37 issues advanced and 24 declined on the DSE trading floor last week.

The investors remain worried amid soaring in Covid-19 cases and death and its long-lasting impact on the country's economy as well as earnings of the listed companies, commented International Leasing Securities.

The market capitalisation of the DSE edged up slightly to Tk 3,106 billion Thursday, from Tk 3,099 billion in the previous week.

Beximco Pharma dominated the week's turnover chart with shares worth Tk 327 million changing hands, followed by Square Pharma, Grameenphone, Olympic Industries and Central Pharma.

The Chittagong Stock Exchange (CSE) also ended slightly higher with its CSE All Share Price Index - CASPI - gaining 30 points to settle at 11,267 and the Selective Categories Index - CSCX - advancing 18 points to close at 6,826.

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