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Block trade raises DSE turnover to six-month high

Transactions still limited to a handful of stocks

FE REPORT | May 25, 2023 00:00:00

The Dhaka Stock Exchange witnessed six-month high turnover on Wednesday at over Tk 11 billion as buoyant investors injected fresh funds into selective stocks for quick gains.

Turnover, a crucial indicator of the market, was Tk 11.10 billion on the country's premier bourse, climbing 20 per cent from the previous day.

It was the biggest single-day transaction since November 8 last year, when the market turnover was recorded at Tk 14.95 billion.

Block trade, however, accounted for 12 per cent of Wednesday's turnover, where stocks like Social Islami Bank, Emerald Oil Industries, Al-Haj Textile, Pragati Life Insurance, and Islami Bank dominated the block trade board.

The prime bourse witnessed an increase in transactions on its block board in recent months when stock trade in the main market fell due to the imposition of the floor price in July last year.

A block trade is a large and negotiated transaction of securities. Block trades can take place outside the main market through a private purchase agreement.

The Bangladesh Securities and Exchange Commission (BSEC) relaxed buying and selling of shares up to 10 per cent lower than the floor price to boost transactions in the block market in November last year.

Investors were active on both sides of the trading fence on Wednesday as some of them strove to book profit in the last hour of the trading session where others reshuffled their portfolios in the small-cap stocks, according to International Leasing Securities.

Stockbrokers said many high-net-worth individuals were in a mood to pour fresh funds into selective stocks after seeing many stocks rallying and generating short-term returns over the last few weeks.

Also, the income tax rebate offered by the government against investments in listed securities attracted some taxpayers ahead of the fiscal year end.

Reportedly, the government has been planning to scrap the income tax rebate on secondary stock investment. Market operators criticized the plan. A rumour has been circulating that an investment in stocks would help avail tax rebate at least for this year if it is made before the end of June.

"The highest daily turnover until now this year is good news for us but it is early to say that the market is stable as transactions are limited to a handful of stocks," said Md Sajedul Islam, senior vice-president of the DSE Brokers Association of Bangladesh.

A lot of investors have stayed off the market for long, which Mr Islam blamed on the price restriction imposed by the market regulator in July last year.

Some selective stocks such as Bangladesh Shipping Corporation, Sea Pearl Beach Resorts, Navana Pharma Pharmaceuticals, Gemini SeaFood and Unique Hotel & Resorts dominated the main turnover board for several weeks.

The life insurance sector accounted for 12.3 per cent of the day's turnover, followed by food and general insurance.

Though the market soared in the opening session, the last hour sale pressure dragged the broad index to the opening level.

DSEX, the prime index of the DSE saw a fractional loss of 0.28 point to settle at 6306, after gaining almost 25 points in the past two days.

"The rallying capital market hit a clutch on the board owing to the profit-booking approach of cautious investors after the benchmark index soared to six months high the previous day," said EBL Securities.

Losers took a modest lead over gainers as out of 364 issues traded, 99 declined, 74 closed higher and 191 issues remained unchanged on the DSE trading floor.

Navana Pharma became the most-traded stock with shares worth Tk 372 million changing hands, followed by Intraco Refueling Stations, Bangladesh Shipping Corporation, Orion Infusion and Genex Infosys.

The Chittagong Stock Exchange (CSE), however, edged up with the CSE All Share Price Index (CASPI) gaining 14 points to settle at 18,596 and its Selective Categories Index (CSCX) rising 5 points to close at 11,126.

The port-city bourse traded 4.72 million shares and mutual fund units with turnover value of Tk 150 million.

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