Dhaka stocks continue its onward march

FE Report

The Dhaka Stock Exchange (DSE) continued its onward march for the 10th consecutive week ending Thursday, the longest ever-gaining streak of the bourse.

The market was volatile during the week dominated by Grameenphone (GP), the most weighted issue at the DSE, which met a series of market-cooling measures taken by the Securities and Exchange Commission (SEC).

Analysts said the continued inflow of funds into the market was the main reason of the persisting bull-run of stocks at the prime bourse as the season of corporate declarations is nearing.

During the week, the benchmark DSE General Index (DGEN) closed at a new high of 5,760.95, up by 125.22 points or 2.22 per cent.

The broader DSE All-shares Price Index (DSI) surged by 96.94 points or 2.10 per cent to close at 4719.41 and the DSE-20 blue chip index shed 89.92 points or 2.80 per cent to stand at 3125.58.

GP, the week's biggest market mover, skyrocketed 15.77 per cent despite more than six per cent fall in the last trading session after the SEC ordered trading in GP and Marico shares only on cash in a desperate bid to rein in the spiraling prices of the two issues.

The order will be effective from Monday when the trading will resume after the two-day weekend and the holiday on Sunday, the International Mother Language Day.

On Thursday, the last trading session of the week, the SEC placed the two heavyweight shares in the 'spot market', meaning their stocks now would be sold or bought only on cash.

In the spot market, the period of settling trading of a share is only one day while in the public market the trading is settled in three days. GP and Marico stocks had been being traded in the public market since debut.

Marico lost more than six per cent due to the SEC price-curbing move in the last session.

On Wednesday, the Bangladesh Merchant Bankers Association (BMBA) suspended the margin loan facility against GP stocks as the company's price-earning (PE) ratio exceeded the 50 mark. Earlier, the SEC had also suspended the netting facility for GP.

Experts welcomed the regulator's move and said price correction was indispensable in the market that rallied for long.

"It was a good move. It's also a positive sign for the market, which will attract the investors towards companies with strong fundamentals," said Akter H Sannamat, Managing Director of the Prime Finance and Investment Ltd.

"The market needs to take a break after a long rally," said Sannamat.

Trading activity in the last week was better than the previous week as the average daily turnover stood at Tk 14.85 billion, up by 17.64 per cent from the previous week's Tk 12.62 billion.

Banks were the most notable losers of the week. The index for banks went down by 4.40 per cent. General insurance companies lost 4.03 per cent, life insurance 1.85 per cent, cement 2.81 per cent, energy 0.90 per cent and tannery sector dropped by 2.59 per cent.

Pharmaceuticals finished flat while the leasing sector gained 1.41 per cent and mutual funds 0.45 per cent.

Out of the total 263 issues, 61 advanced, 186 lost, two remained unchanged and 14 were not traded during the week.

Beximco Ltd was the week's top turnover leader with shares worth Tk 8.79 billion traded, which was the week's highest transaction in shares of a DSE company in terms of value.

Grameenphone, Lankabangla Finance Company, AB Bank, Navana CNG , Bextex, Premier Bank, Keya Cosmetics, Summit Power and National Bank were the next other turnover leaders of the week.

CMC Kamal, a weak performer, posted the biggest gain of 65.63.

It was followed by Aims First Mutual Fund, GP, Keya Cosmetics, Purabi General Insurance, Lankabangla Finance, Rupali Bank, Navana CNG, Chittagong Vegetable and Golden Son.

The week's top losers were Bangladesh Plantation, BLTC, Dutch-Bangla Bank , United Insurance, Agni Systems, Beach Hatchery, Eastern Bank, Savar Refractories, Alpha Tobacco and HR Textile.