Loss-making companies kept their dominance on the Dhaka Stock Exchange (DSE) gainers' chart on Thursday, as a rumour spread on the trading floor that gamblers were putting bets on securities.
Six out of top 10 market gainers have been suffering losses in business operations at least for the past three quarters through March this year.
Investors chased the rally of stocks with the hope for quick profits at a time when nearly three out of every five issues have remained stuck at floor prices. Against this backdrop, companies with low paid-up capitals become targets for price manipulation.
For example, Olympic Accessories, which has incurred losses for the last two years, soared 10 per cent and topped the gainers' list on Thursday. It was at the top of the Wednesday's gainers' list as well.
Olympic Accessories took off the floor price just three days back.
Khan Brother PP Woven Bag Industries also rose 9.55 per cent despite making losses for the last three quarters.
The company climbed above the floor price three months back, leaving behind its better-performing competitors. Its stock price almost doubled since then to Tk 19.5 on Thursday.
Midas Financing, Appollo Ispat, Union Capital, and Khulna Printing & Packaging also made it to the top gainers' chart, gaining between 5.38 per cent and 7.48 per cent. All of them have showed a slowdown in business.
Four other top gainers --Zaheen Spinning, newly listed Midland Bank, Metro Spinning and IT Consultants - have managed to make profits in the latest quarters, but their price surges on the DSE is much higher compared to their financial performance.
Insiders say shares of most big companies that are major contributors to the index in terms of market capitalisation are stuck at floor prices, which is why investors moved towards small-cap stocks highly susceptible to price swings driven by speculation or manipulation.
Despite a lack of business growth, a company exhibits a rally in the stock market when a certain group of people influence the price while others join the rally not to miss out on the opportunity to make quick bucks.
These stocks, however, have an insignificant impact on the index. The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), went up only 8.29 points to settle at 6,319 on Thursday.
Prof Abu Ahmed, former chairman of the economics department of the University of Dhaka, said a group of dishonest people had been behind the artificial price hikes.
After a certain period, when people started to invest, manipulators dumped their holdings, he said.
"These are risky bets and investors should think twice before putting money in troubled stocks," added Mr Ahmed.
The DS30 Index, which consists of blue-chip companies, gained 1.68 points to 2,187. The DSES index, which represents Shariah-based companies, advanced 2.25 points to 1,372.
Investors' participation in the market rose 25 per cent to Tk 7.85 billion as block trades added Tk 1.98 billion to the total turnover.
In the block market, buyers and sellers trade bulk numbers of shares at a negotiated price without disrupting the regular market.
Beximco Pharma with a share transaction worth Tk 569 million, Unilever Consumer Care Tk 521 million and Runner Automobiles 115 million dominated the block board.
Stockbrokers said institutional investors sought to book profits ahead of their fiscal year closing, rebalancing portfolios by selling less potential stocks and buying more potential ones.
Of the issues traded, 103 advanced, 74 declined and 90 remained unchanged on the DSE trading floor.
Gemini Sea Food was the most-traded stock with shares worth Tk 229 million changing hands, closely followed by Meghna Life Insurance, IT Consultant, Trust Life Insurance and Eastern Housing.
The Chittagong Stock Exchange (CSE) also inched up with the CSE All Share Price Index - CASPI -rising 29 points to settle at 18,657 and the Selective Categories Index - CSCX - gaining 17 points to close at 11,154.
Of the issues traded, 70 advanced, 46 declined and 108 issues remained unchanged on the CSE.
The port city's bourse traded 77.29 million shares and mutual fund units with a turnover volume of Tk 3.21 billion, riding on block trades.
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