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Stocks gain after two-day slump

FE Report | June 19, 2019 00:00:00

Stocks rebounded on Tuesday, snapping a two-day decline, as signs of a move to review budgetary measures regarding the capital market rekindled investors' sentiment.

After losing nearly 100 points in the past two straight sessions, the prime index of the Dhaka Stock Exchange (DSE), the DSEX, settled 24.94 points higher at 5,400.

Market analysts said the market returned to the green zone as the National Board of Revenue (NBR) chairman hinted at the possibility of reviewing some proposals announced in the budget for fiscal year (FY) 2019-20.

Strong criticism of the proposed tax on stock dividend and retained earnings prompted the authorities concerned to consider a review of the measures, they said.

The Bangladesh Securities and Exchange Commission (BSEC) said on Monday it would sit with the finance minister and the NBR chairman to discuss the issue.

A leading broker said the possibility to cancel the proposed tax on listed companies' reserve and retained earnings made investors optimistic.

Finance Minister AHM Mustafa Kamal proposed, among other, the imposition of 15 per cent additional tax on retained earnings and reserves only if the amount exceeds 50 per cent of the paid-up capital of the company.

The budget 2019-20 also proposed to impose 15 per cent tax on stock dividend to promote cash dividend as part of efforts to increase money flow into the stock market.

On Tuesday, the market opened on a positive note and drifted into the red after the first hour of trading. However, the index went up steadily during the remaining hours of the session.

Two other indices also finished higher. The DS30 index, comprising blue chips, advanced 5.71 points to finish at 1,895 and the DSE Shariah Index gained 8.29 points to close at 1,232.

The International Leasing Securities said the investors showed their buying interest riding on the news that the NBR will reconsider the 15 per cent tax on extra reserve and stock dividend of listed companies.

Turnover, another important indicator of the market, stood at Tk 5.28 billion, down 1.12 per cent from the previous day's turnover of Tk 5.35 billion.

A total number of 135,455 trades were executed in the day's trading session with trading volume of 175.95 million securities.

The market capitalisation of the DSE also fell to Tk 3984 billion from Tk 3968 billion in the previous session.

Most of the sectors posted gain with telecom witnessed the highest gain of 1.42 per cent, followed by pharmaceuticals (0.56 per cent), engineering (0.55 per cent), food (0.46 per cent), power (0.12 per cent) and banking (0.01 per cent).

Only non-bank financial institutions saw a 0.47 per cent correction.

The gainers took a modest lead over the losers, as out of 349 issues traded, 196 advanced, 105 declined and 48 issues remained unchanged on the DSE trading floor.

Eastern Insurance was the day's best performer, posting a gain of 9.82 cent while Pragati Insurance was the worst loser, shedding 5.82 per cent.

The port city bourse, Chittagong Stock Exchange, also ended marginally higher with its CSE All Share Price Index - CASPI - advancing by 86 points to settle at 16,576 and the Selective Categories Index - CSCX -gaining 53 points to finish at 10,044.

Here too, the gainers beat losers, as 155 issues closed higher, 69 lower and 35 remained unchanged on the CSE trading floor.

The port city bourse traded 14.95 million shares and mutual fund units worth Tk 424 million in turnover.

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