Two junk stocks -- Dulamia Cotton Spinning Mills and Imam Button Industries -- witnessed an unprecedented price hike in recent times although they have no undisclosed price sensitive information (PSI).
Junk stocks have also frequently featured the top gainers list over the past few months, raising question about investors' preference for such shares despite their poor financial performance.
A company's stocks are termed junk when its commercial production remained shut or it fails to provide dividends to shareholders or hold its annual general meeting timely.
Some junk stocks continued to soar despite Dhaka Stock Exchange's several attempts to discourage investors from pouring money into those shares.
Within a month, the Imam Button's share price rose more than 34 per cent to close at Tk 41.60 on Monday. The company's share price was Tk 19.10 a month earlier.
The Imam Button's stock price jumped more than 128 per cent in four months even though the company's production remained suspended and it failed to declare dividends over the years.
The share price of Dulamia Cotton Mills also jumped more than 49 per cent to close at Tk 80.50 on Monday. The company's share price was Tk 54 a month ago.
In the past four months, the company's share price increased by 80 per cent or Tk 35.70 each.
Following their 'abnormal' price hike, the DSE served show-cause notices on the companies. The companies, however, informed the DSE that there is no undisclosed price sensitive information for recent unusual price hike.
The shares of the weak-performing companies also dominated the gainers chart on the premier bourse in recent months.
Market analysts said the investors need to be cautious about buying junk and overvalued stocks in order to avert any misfortune.
Share prices of many junk stocks are on the rise, although transactions and price movement of these companies' shares do not match their fundamentals, said an analyst.
He noted that some influential investors through spreading rumours are trying to manipulate the prices of shares of the companies under question.
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