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Weekly analysis

Stocks nosedive as large-cap issues tumble

Babul Barman | May 05, 2018 00:00:00

The benchmark index of the Dhaka bourse fell below 5,700-mark last week that ended Thursday as selling spree gripped the investors.

Banking and telecom issues mostly faced the onslaught of selling pressure.

Market operators said lower-than-expected quarterly earnings results, first ever no dividend declaration of AB Bank coupled with a prolonged public holidays spelled the erosion of share prices.

"The banking issues were bruised amid the news that AB Bank was downgraded to the 'Z' category as the bank declared no dividend for the year ended on December 31, 2017," said an analyst at a leading brokerage firm.

He noted that AB Bank's no dividend declaration news prompted investors to sell banking shares and hit the overall market.

Accordingly, AB Bank was the week's worst loser, losing 26.38 per cent to close at Tk 12 on Thursday. The banking sector lost 3.70 per cent, the highest among the major sectors.

Some 90 listed companies disclosed their un-audited quarterly financial results while some 29 companies, including 10 banks recommended dividends last week.

The week featured only two trading days as the market remained closed Sunday, Tuesday and Wednesday on the occasion of Budhha Purnima, May Day and Shab-e-Barat respectively. Both the two sessions faced sharp decline.

Week-on-week, DSEX, the key index of the prime bourse, went down by 115 points or 1.98 per cent to settle the week at 5,698.

"As some of the large-cap stocks have failed to meet investors' expectation in the latest financial disclosure, caused nosedive in the indices," International Leasing Securities, a stockbroker, in its weekly market analysis said.

The stockbroker noted that the investors' selling spree mostly initiated from the liquidation of the December-end company stocks, especially bank, telecom and financial institutions.

Two other indices also ended lower with the DS30 index, comprising blue chips, fell nearly 44 points to finish at 2,128 and the DSES (Shariah) index lost 25 points to settle at 1,318.

The port city's bourse the Chittagong Stock Exchange (CSE) also drifted lower with the CSE All Share Price Index - CASPI - losing 331 points to settle at 17,595 and Selective Categories Index - CSCX -shedding 197 points to close at 10,639 points.

Turnover, another important indicator of the market, stood at Tk 10.61 billion last week against Tk 25 billion in the week before as the last week saw only two trading sessions instead of five.

Block trade contributed more than 9.0 per cent to the total weekly turnover, where Doreen Power, BATBC, Grameenphone, Usmania Glass and AB Bank dominated the block trade board.

The daily turnover averaged Tk 5.33 billion, which was 6.46 per cent higher than the previous week's average of Tk 5.01 billion.

The banking sector kept its dominance in turnover chart, capturing 16 per cent of the week's total turnover, followed by pharmaceuticals with 12 per cent and engineering 11 per cent.

According to EBL Securities, recent earnings declarations from several issues might have failed to meet investors' expectation that resulted into selling pressure throughout the week.

"Microeconomic scenario like deteriorating heath of balance of payment due to increased import payment raised concern among investors," the stockbroker said.

The market capitalisation of the DSE also fell 1.56 per cent as it was Tk 4,046 billion on opening day of the week while it came down to Tk 3,983 billion on Thursday.

All the major sectors posted negative movement with banking sector posted the highest loss of 3.70 per cent, followed by telecommunication with 1.90 per cent, non-bank financial institutions 1.77 per cent, engineering 1.60 per cent, power 1.37 per cent and food & allied 0.78 per cent.

The losers took a strong lead over the gainers as out of 341 issues traded, 214 closed lower, 98 advanced and 29 issues remained unchanged on the DSE floor.

Beximco dominated the turnover chart for the fifth consecutive weeks with shares worth Tk 795 million changing hands, followed by BRAC Bank with Tk 435 million, Square Pharma Tk 289 million, Navana CNG Tk 262 million and BBS Cables Tk 260 million.

Recently listed Queen South Textile was the week's best performer, posting a gain of 20.78 per cent while the AB Bank was the week's worst loser, losing 26.38 per cent following its no dividend declaration.

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