Stocks down for 2nd straight week

The stock market went down for the second straight week that ended Thursday with the turnover declining as investors remained reluctant to make fresh investments amid mounting political tension.

The ruling Awami League-led grand alliance and the BNP-led opposition alliance are now locked in a political battle over the January 5 general election. Several spells of countrywide blockade programmes over the last one month have already taken a heavy toll on the country's overall trade and business.

The market witnessed four trading sessions, similar to previous week as it remained closed Wednesday on the occasion of Christmas Day.

The market managed to close positive in the first session of the week while last three sessions declined amid reduced activities caused by absence of positive expectations in investors' mind.

Week-on-week, the prime index of Dhaka Stock Exchange - DSEX - went down by 43.68 points or 1.03 per cent to close the week at 4,200.96 points.

The DS30 index, including blue chip stocks, also went down by 19.12 points or 1.30 per cent in the week and closed at 1,447.95 points.

The Chittagong Stock Exchange (CSE) also ended lower for the second running week, with its Selective Categories Index - CSCX - losing 86.92 points or 1.04 per cent to close the week at 8,254.00 points.

The market saw lower investor participation in the week. The total turnover stood at Tk 19.08 billion against Tk 20.49 billion of the previous week as this week also witnessed four trading sessions like the previous one.

Consequently, the daily turnover averaged Tk 4.77 billion, registering a 6.86 per cent decline over the previous week's average of Tk 5.15 billion.

"The final week of 2013 ended in dismay. Looming political fear and its expected impact on national economy marred investment outlook, triggering correction in the market," said IDLC Investments, a leading merchant bank, in its weekly market analysis.

Meanwhile LankaBangla Securities, a leading stock broker, said in its weekly market analysis: "Institutional investors normally tend to book profit towards the year-end. Probably this profit booking tendency is pushing market down for the second straight week".

"Market sentiment remains more on a bearish side. Political clashes are going nowhere near any solution," it said.

"Investors are not sure whether clashes will stop even after election. These sorts of situations will severely hamper corporate profitability, if continued for several quarters," said the stock broker.

Many are expecting that first quarter of 2014 will be bearish for textile companies as buy orders are falling due to delivery uncertainties, it said.

According to newspaper reports, around US$ 500 million worth of RMG orders have already been shifted to India. This is going to hamper banking sector profitability also as RMG owners are the major clients of local banks, said the stock broker.

Correspondingly, these sorts of political clashes will severely hamper cyclical stocks, the stock broker added.

"Normally year-end purchase usually stays low, as institutions shun from making heavy purchases in order to keep their cash flow healthy and at the same time general public also like to hold cash in their hands in order to clear any dues and payments," observed Zenith Investments.

The losers took a strong lead over the gainers as out of 296 issues traded during the week, 190 declined, 87 advanced and 19 remained unchanged on DSE floor.

All the major sectors ended in red last week except banks as the heavyweight sector gained 0.40 per cent during the week. Textile was the worst loser among the major sectors with 3.83 per cent loss. Pharmaceuticals lost 1.83 per cent followed by fuel & power with 1.26 per cent, telecommunications 0.42 per cent and NBFIs 0.32 per cent.

The market capitalisation of the DSE went down slightly by 0.60 per cent as it was Tk 2,635.03 billion on the opening day of the week and it stood at Tk 2,619.23 billion on closing day of the week.

The week observed debut of a new stock Apollo Ispat Complex. The company topped the week's turnover chart with shares worth Tk 1.03 billion changing hands.

Massive trading in Apollo Ispat helped the engineering sector capture 17.0 per cent of the week's total turnover. However, textile remained the turnover leader, accounting for 27.0 per cent of total turnover.

Bay Leasing was the week's top gainer, posting a rise of 24.92 per cent while Samata Leather Complex was the week's worst loser, slumping by 25.62 per cent.