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DSEX makes biggest jump in three years

It soars 150 points as investors take position on lucrative price level amid government move to ease liquidity situation

FE Report | April 02, 2018 00:00:00

Stocks witnessed yet another bullish session Sunday as investors went on buying spree mainly on the banking and non-bank financial institutions sectors amid growing optimism about the market.

DSEX, the prime index of the Dhaka Stock Exchange (DSE), crossed the 5,700-mark once again and ended at 5,747 points, soaring nearly 150 points or 2.67 per cent.

It was the biggest single-day gain of DSEX in nearly three years since May 10 in 2015, when DSEX gained more than 154 points or 3.75 per cent. It was also the second highest gain of DSEX since its inception on January 27, 2013.

The CSE All Share Price Index (CASPI) of port city's bourse jumped 489 points at closing.

Market operators said the buying spree was spurred mainly by the government's steps to ease the ongoing liquidity problem coupled with lucrative price level set in recent times.

"The investors have reacted positively and started to exhibit their active participation in response to various steps taken by the government," said an analyst at a leading brokerage firm.

Continuing the previous day's gaining streak, the market started with a flying note and remained vibrant throughout the session amid strong buying pressure from the investors, including global fund managers.

AB Mirza Azizul Islam, former finance adviser to the caretaker government, said the government's decisions to mitigate the ongoing liquidity crisis in the financial market gave a positive signal to the stock investors.

Mr. Islam, also former chairman of the Bangladesh Securities and Exchange Commission, said, "Investors overreacted to the government's move to reduce cash reserve requirement for increasing fund flow to the market as index gained 150 points in a single day."

Mostaque Ahmed Sadeque, president of DSE Brokers Association of Bangladesh, said all the government decisions are market-friendly.

"The government's decisions to increase fund flow will stop the aggressive fund collection by banks at higher interest rates and subsequently overall interest rate will come down, which will also stop fund withdrawal from the market," he said.

He expressed the optimism that the market will stabilise in coming days as recent restless correction took many fundamental stocks to lucrative price levels.

According to International Leasing Securities, the premier bourse saw an upbeat session amid growing optimism from the investors.

The stockbroker noted that for mitigating the ongoing liquidity crisis, the government has decided to allow its agencies to deposit 50 per cent of their funds with private banks, which was previously 25 per cent, and reduce the cash reserve requirement by 1.0 per cent point to 5.5 per cent, which enhanced the investors' optimism about the capital market.

Optimistic investors showed their buying appetite on sector-wise large-cap issues, especially on bank, financial institutions, textile, engineering, and telecom sectors' stocks.

The two other indices also ended higher. The DS30 index, comprising blue chips, went up by 44 points or 2.08 per cent to close at 2,150 points. The DSE Shariah Index (DSES) rose 25 points or 1.91 per cent to close at 1,340 points.

Turnover, however, came down to Tk 4.41 billion, which was 6.17 per cent lower than the previous day's Tk 4.70 billion.

All the large-cap sectors showed positive performance except food & allied which lost 0.05 per cent.

Gainers outpaced losers as out of 338 issues traded, 298 advanced, 25 declined and 15 issues remained unchanged on the DSE floor.

Port city bourse CSE also ended higher with the CSE All Share Price Index - CASPI - soaring 489 points to settle at 17,704 points and Selective Categories Index - CSCX - advancing 295 points to finish at 10,698 points.

Here too, the gainers beat the losers as 208 issues closed higher, 25 ended lower and 5 remained unchanged.

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