Stocks snap three-week rally on profit-taking

FE REPORT
The equity benchmark index closed in the red this week, snapping a three-week winning streak, as investors rushed to book profits ahead of upcoming earnings season.
The recent rally, which saw the benchmark index climb past the 5,600-point mark for the first time in over a year, appeared to lose steam as risk-averse investors opted to cash in on quick gains.
Analysts said the market's inability to sustain its upward momentum was largely due to cautious trading in the lead-up to June-end earnings declarations.
"The bullish momentum appeared to stall as investors booked gains, with mixed earnings expectations prompting further sell-offs," said a leading stockbroker.
Jittery investors preferred to lock in profits on stocks that had rallied quickly in recent weeks, he added.
Despite the short-term dip, analysts remain optimistic about the broader market outlook. Supportive macroeconomic indicators, the prospect of a smooth political transition, and expectations of a policy rate cut amid easing inflation are seen as potential catalysts for a rebound, they said.
This week, the market saw two sessions close higher while three others ended sharply lower as investors turned cautious amid heightened volatility.
The DSEX, the benchmark index of Dhaka Stock Exchange (DSE), settled the week more than 90 points or 1.60 per cent lower at 5,524. It had gained 264 points in the past three weeks.
The blue-chip DS30 index, a group of 30 prominent companies, also lost 32 points to close at 2,151 while the DSES index, which represents Shariah-based companies, shed 34 points to end at 1,196.
EBL Securities, in its weekly analysis, said that the market faced broad-based profit booking pressure as investors locked in recent gains and turned cautious amid volatile momentum.
Despite the week beginning on a bullish impulse with robust participation, the market sentiment turned cautious in the mid-week, triggering three consecutive sessions of selling pressure as investors offloaded recently appreciated holdings, said the stockbroker.
However, the benchmark index rebounded in the final trading session, supported by bargain-hunting sentiment from opportunistic investors, which helped pare some losses, it added.
Price fall of selective stocks, including some blue chips such as Walton, Beximco Pharma, Islami Bank, Prime Bank and Beacon Pharma dragged the market index down. These five stocks accounted for one-third of the weekly index plunge.
However, there is also a cause for concern, as shares of some low-performing companies also continued to surge, signalling potential market manipulation.
Four junk stocks -- Prime Finance, Alltex Industries, Phoenix Finance, and Bangladesh Finance -- featured in the weeks' top 10 gainers' list, soaring between 12.6 and 21 per cent during the week.

Market participation remained weak as the total turnover stood at Tk 57.48 billion as against Tk 64.92 billion in the week before.
Accordingly, the average daily turnover dropped to Tk 11.50 billion, down over 11 per cent from the previous week's average turnover of Tk 12.98 billion.
Investors were mostly active in the engineering sector, which accounted for 11.4 per cent of the week's total turnover, followed by pharma (10.3 per cent) and textile sector (10.2 per cent).
Losers outnumbered the gainers, as out of 397 issues traded, 260 saw price correction while 102 others gained and 35 issues remained flat on the DSE floor.
Most of the major sectors showed negative performance as the banking, power, telecom and engineering sectors suffered losses while only non-bank financial institutions managed to post gains.
Robi Axiata became the most-traded stocks, with shares worth Tk 2.23 billion changing hands, closely followed by Brothers PP Woven Bag Industries, Orion Infusion, BRAC Bank and Trust Islami Life Insurance.
The Chittagong Stock Exchange also ended lower, with its All Shares Price Index (CASPI) shedding 183 points to close at 15,519, while the Selective Categories Index (CSCX) fell 122 points to 9,528.
The port city bourse traded 21.83 million shares and mutual fund units with turnover value of Tk 923 million.

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