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Stocks rise to two-month high on stimulus

DSE sees biggest single-day transaction in one year

FE Report | February 14, 2020 00:00:00

Stocks continued to rally on Thursday, with the key index of the Dhaka Stock Exchange (DSE) hitting a two-month high amid growing investor confidence in the market.

The market started on a flying note and remained vibrant throughout the session amid strong buying pressure from the investors, including global fund managers.

Turnover, an important indicator of the market, also increased to Tk 7.30 billion, 11 per cent up from the previous day's turnover of Tk 6.57 billion.

It was the biggest single-day transaction in one year since February 14, 2019, when the turnover totalled a record Tk 9.32 billion.

Attuned to the rising turnover value, DSEX, the prime index of the DSE, continued to hold its soaring momentum, adding 83.78 points or 1.86 per cent to settle at two-month high at 4,564.

The DSEX added 180 points in the past three sessions after the Bangladesh Bank issued a circular on Monday confirming fund support to revamp the ailing capital market.

Market analysts said the central bank's fund supportive measures coupled with the government's moves to divest shares of selected state-owned entities boosted the investor sentiment.

A merchant banker said the investors' enthusiasm sustained as the institutional investors, including global fund managers, were injecting fresh investments into stocks, buoyed by the liquidity support news.

The central bank on Monday allowed 59 schedule banks to form a Tk 2.0 billion special fund each by taking low-interest loans from the BB to invest in the stock market.

The stock rally has been largely supported by high market liquidity and large-cap stocks like United Power, BATBC, Power Grid Company, Khunla Power and Square Pharma, he said.

An analyst said the central bank's moves would improve the liquidity flow. But securities regulator should address other issues like rampant manipulation, good governance and dearth of quality stocks to ensure long-term stability in the market.

Two other securities indices also ended higher. The DS30 index, comprising blue chips, rose 20.56 points to finish at 1,536 and the DSE Shariah Index advanced 15.12 points to close at 1,045.

According to the UCB Capital, investors went for heavy buying as momentum is gradually building after the announcement of liquidity support fund by the Bangladesh Bank.

EBL Securities said the investors continued to show their appetite after the declaration of the special fund for banks to invest in the capital market and subsequently large-cap stocks witnessed buying pressure.

Power sector booked the highest gain of 3.43 per cent, followed by engineering with 3.30 per cent, financial institutions 2.48 per cent, food 1.62 per cent, banking 1.41 per cent, pharma 0.86 per cent and telecom sector 0.19 per cent.

Gainers took a strong lead over the losers, as out of 356 issues traded, 259 closed higher, 65 ended lower and 32 remained unchanged on the DSE trading floor.

A total number of 184,279 trades were executed in the day's trading session, with trading volume standing at 299.06 million shares and mutual fund units.

The market-cap of the DSE also rose to Tk 3,470 billion from Tk 3,421 billion in the previous session.

Khulna Power Company topped the turnover chart with shares worth Tk 286 million changing hands, followed by LafargeHolcim, Indo-Bangla Pharma, Shepherd Industries and SS Steel.

Far Chemical Industries was the day's best performer, posting a gain of 10 per cent while Samata Leather Complex was the worst loser, plunging 5.72 per cent.

The port city's bourse, the Chittagong Stock Exchange, also ended higher with its All Shares Price Index (CASPI) -- soaring 269 points to close at 13,903 and the Selective Categories Index -- CSCX -- rising 165 points to finish at 8,432.

Here too, the gainers beat losers, as 194 issues closed higher, 42 ended lower and 24 remained unchanged on the CSE.

The port city bourse traded 15.58 million shares and mutual fund units worth Tk 734 million in turnover.


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