Stocks pare gains but still stay positive

Stocks reversed earlier gains this week but managed to log weekly gains as investors digested a policy rate hike by the central bank.
The market faced a major setback in the last two days of the week as the Bangladesh Bank increased the policy rate by a further 50 basis points.
The latest policy rate hike amid a tightened monetary space will affect the investor sentiment in the short term, market experts said, adding that the rising interest rates have already made fixed-income instruments more lucrative as compared to stock market return.
Alongside, further devaluation of the local currency may also have an impact on the current market recovery, they fear.
The export-oriented firms will reap benefits while the cost of funds and production costs of import-oriented companies will go up further following the depreciation of taka.
Of the five trading days this week, the first two days closed higher, supported by the regulatory intervention and favourable earnings disclosure of the listed companies.
However, the last three days eroded most of the gains as the investor sentiment was affected by potential interest rate hikes in the money market following the latest increase in policy rates.
The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), finally settled more than 45 points or 0.81 per cent higher at 5,661. The DSEX added almost 80 points in the past two consecutive weeks.
Buoyed by the upbeat earnings reports, opportunistic investors took positions in selective stocks, particularly large-cap ones.
Saif Powertec, Kohinoor Chemicals, Beximco Pharma, National Bank and BAT Bangladesh contributed largely to the weekly market jump as they jointly accounted for more than half of the weekly gain.
"The market managed to sustain its gaining streak for two consecutive weeks, fuelled by bargain hunters seizing opportunities in the potentially lucrative shares, although the market recovery observed a major setback in the last two days," said EBL Securities.
The DS30 index, a group of 30 blue-chip companies, also rose more than 7 points to 2015 while the DSES Index, which represents Shariah-based companies, advanced 10 points to 1,242.
Mir Ariful Islam, managing director of the Sandhani Asset Management, said the government's latest policy rate hike will reduce the fund flow to the stock market for a short-term.
Although the lending rate may rise initially, the market-based rate is necessary to reduce inflationary pressure and restore macrocosmic stability.
"If the country's macrocosmic stability returns, the stock market will also be benefited in the long-term," said Mr Islam.
Turnover, a crucial indicator of the market, also rose to Tk 48.05 billion this week as against Tk 28.24 billion last week, as this week saw five trading days instead of the previous week's four days.
Accordingly, the average daily turnover jumped to Tk 9.61 billion, which was 36 per cent higher than the previous week's tally of Tk 7.05 billion.
Investors were mostly active in the pharmaceutical sector, which accounted for 23 per cent of the week's total turnover, followed by the textile sector (15 per cent) and engineering sector (11 per cent).
Majority of traded stocks saw price appreciation as out of the issues traded, 240 advanced, 128 declined and 25 remained unchanged during the week.
Most of the sectors posted gains with the service sector saw the highest gain of 15 per cent, riding on Saif Powertec which surged more than 42 per cent. It was followed by NBFI, textile, mutual fund and banking sector.
Asiatic Laboratories dominated the turnover chart, with shares worth Tk 1.87 billion changing hands, followed by Orion Infusions, Best Holdings, Lovello Ice-cream and Malek Spinning Mills.
Saif Powertec was the week's top gainer, posting a 42 per cent gain while Uttara Bank was the worst loser, shedding 16.15 per cent.
The Chittagong Stock Exchange also ended higher, with its All Shares Price Index (CASPI) rising 180 points to 16,231 and the Selective Categories Index (CSCX) gaining 107 points to 9,771.
Of the issues traded, 202 advanced, 103 declined and 24 others remained unchanged on the CSE.

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