Stocks rebound on bargain hunting after record fall
Dhaka stocks soared on Tuesday after hitting nearly a six-year low in the previous session as a section of investors gave a pause in panic selling while some others went for buying shares at lucrative prices after the plunge.
Dhaka Stock Exchange’s key index DSEX advanced by 3.70 per cent, or 148.26 points, to close at 4,156.32 points on the day after losing 280 points in the previous trading session. The index decreased by 458.68 points in the previous four trading sessions.
Though the market ended with a massive gain on Tuesday, many investors remained cautious about the impact of global coronavirus outbreak and the presence of the virus in Bangladesh, market operators said.
The DSEX lost 602 points in the last 13 sessions with just three positive sessions.
Market operators said that the core index started gaining from the very beginning of Tuesday’s session and climbed more firmly as the session progressed as investors gave a pause in panic sales while some institutional investors went for buying shares after a significant plunge in recent days.
They said that the rout sent the key index to over a six-year low, which instigated some investors to buy shares on Tuesday.
The detection of three coronavirus-infected people in the country for the first time triggered panic sales in the market on Monday.
The worsening coronavirus outbreak and concerns about its impact on global economic activities including Bangladesh has hit the stock market very hard, marking the worst day since the DSEX inception.
Some banks and institutional investors came forward to halt the plunge and to maximise their profits on Tuesday.
Investors encouraged by the media reports that three banks including United Commercial Bank and Shahjalal Islami Bank informed the Bangladesh Bank that they had formed special funds for investing in the stock market.
The Bangladesh Bank on February 10 allowed each bank to borrow up to Tk 200 crore from the central bank for investing in the stock market.
Market operators said that investors expected that the government might take some revival mechanisms after seeing the free fall on the market.
But, investors’ participation was very poor as investors were grappling not only with the coronavirus but also with the banking sector following the central bank decision to enforce single-digit lending rates, they said.
The turnover on the DSE plunged to Tk 328.33 crore on Tuesday from Tk 499.35 crore in the previous trading session.
Major stock markets around the globe have been plunging for the last few days due to the fears of a coronavirus-fuelled global economic recession.
Besides, the falling credit growth in the country’s private sector and export earnings has also led the stock market to the downward turn.
EBL Securities in its daily market commentary said, ‘On Monday, the market was overcorrected and a section of investors had taken the opportunity on Tuesday to invest in sector specific stocks at lucrative price level.
However, investors are still apprehensive about coronavirus and its
impact on Bangladesh economy.’
‘News over three more banks forming stocks special fund was likely to have a positive impact on the investors’ confidence,’ it said.
The average share prices of all sectors advanced on the day.
The share prices of non-bank financial institution advanced by 5.4 per cent, energy 3.7 per cent, bank 3.3 per cent and telecommunication 1.4 per cent.
Of the 356 scrips traded on the bourse on Tuesday, 323 advanced, 15 declined and 18 remained unchanged.
DSE blue-chip index DS30 soared by 3.27 per cent, or 44.04 points, to close at 1,390.15 points on the day.
Shariah index DSES added 3.35 per cent, or 31.13 points, to end at 960.4 points.
Square Pharmaceuticals led the turnover chart with its shares worth Tk 15.24 crore changing hands on the day.
Orion Infusions, LafargeHolcim Bangladesh, Grameenphone, Khulna Paper & Printing Package, VFS Thread Dyeing, Beacon Pharmaceuticals, SK Trims, BRAC Bank and Khulna Power Company were the other turnover leaders.
Bangladesh National Insurance Company gained the most on the day with a 10-per cent increase in its share prices while Singer Bangladesh fared the worst, dropping 7.68 per cent.
