Stocks exuberant as liquidity worries ease

Stocks moved up on Thursday, with the prime index of the Dhaka bourse crossing the 5,800 mark after two weeks, despite the removal of all special measures to control price movement.
The Bangladesh Securities and Exchange Commission (BSEC) changed the lower circuit breaker back to 10 per cent from 3 per cent, allowing correction of all stocks up to 10 per cent a day, except for two stocks --- Beximco and Islami Bank.
The stock market regulator also lifted the floor price of four companies - Bangladesh Steel Re-rolling Mills, Khulna Power, Meghna Petroleum, and Shahjibazar Power through a directive issued on Wednesday.
Many investors feared a fall of the index after the widening of the lower circuit breaker as it allowed investors to sell shares at lower prices.
But investors showed a reverse reaction, with a buying appetite in lucrative stocks after the withdrawal of the artificial price restrictions.
The stock price of Bangladesh Steel Re-rolling Mills rose 2.22 per cent to Tk 92 per share on the Dhaka Stock Exchange, while Meghna Petroleum remained unchanged at Tk 218.6 per share on Thursday.
However, Shahjibazar Power and Khulna Power lost 9.92 per cent and 9.77 per cent with their floor price gone.
The market opened lower on Thursday due to initial sell pressure following the reinstatement of the regular circuit breaker for stocks. It, however, recovered later, riding on heightened optimism.
The DSEX, the prime index of the DSE, finally settled at 5,804, gaining almost 48 points or 0.82 per cent. It gained 119 points in the past two trading days.
Market experts said measures taken by the latest commission helped rebound investor sentiment, which was why buyers dominated the trading floor.
The new commission took some supportive actions to bring back discipline to the market, boosting investor confidence, said Akramul Alam, head of research at Royal Capital.
Reinstating the standard circuit breakers was one of the positive moves, he added. "In the absence of artificial price mechanisms, the market liquidity will improve in the future."
Apart from the regulatory moves, selective June-closing stocks attracted investors ahead of dividend declarations, added Mr Alam.
Walton, for example, rose 3.57 per cent to Tk 696.9 per share on Thursday, as the local electronic giant announced its decision to hold a board meeting on September 4 to consider, among others, audited financial statements and annual dividend for FY24.
The market recovery was largely supported by high market liquidity and price appreciation of selective large-cap stocks -- BAT Bangladesh, Olympic Industries, LafargeHolcim, Khan Brothers Company, and Prime Bank.
The five stocks jointly accounted for one-third of the index rise.
The blue-chip DS30 index, a group of 30 prominent companies, gained nearly 7 points to 2,124 while the DSES index, which represents Shariah-based companies, rose 7 points to 1,241.
Turnover, a crucial indicator of the market, soared to a two-week high to Tk 9.63 billion, 7 per cent higher over the day before.
Pharmaceuticals, food and banking sectors captured half of the day's total turnover as optimistic investors put fresh bets on the lucrative stocks of these sectors.
Investor euphoria continued with increased market participation, driven by optimism surrounding regulatory moves to bring transparency and accountability to the market, EBL Securities said.
Prices of 75 per cent traded stocks saw price appreciation. Out of 397 issues traded, 298 saw price hikes, 67 closed lower and 32 remained unchanged on the DSE trading floor.
Major sectors posted gains with the non-bank financial institutions witnessing the highest 5.5 per cent rise, followed by engineering 3.3 per cent, cement 3.3 per cent, food 1.3 per cent, power 0.4 per cent and banking 0.1 per cent.
BAT Bangladesh became the most traded stock with shares worth Tk 780 million changing hands, closely followed by MJL Bangladesh, Olympic Industries, Renata and Grameenphone.
Fortune Shoes was the day's top gainer, rising 10 per cent, while Shahjibazar Power was the worst lower, losing 9.92 per cent.
The Chittagong Stock Exchange also ended higher with its All Shares Price Index (CASPI) soaring 117 points to 16,520, while the Selective Categories Index (CSCX) rose 71 points to 9,954.
Of the issues traded, 153 advanced, 70 declined, and 16 issues remained unchanged on the CSE.

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