DSEX gains 213 points in four sessions as buying spree gathers pace

Infographic: TBS

The Dhaka Stock Exchange's benchmark index rose 60 points today (20 September), extending its winning streak to four sessions and taking its cumulative gain to 213 points, as broad-based buying and higher turnover signalled a revival in investor participation after the market's recent sharp correction.

The DSEX closed at 5,592 today, up nearly 4% from 5,379 on 14 September. The DSE30, the blue-chip index, gained 20 points to 2,121, while the DSES, the Shariah-based index, rose 12 points to 1,119.

Turnover increased 14% from the previous session to Tk747 crore, while 287 of the 388 traded issues advanced. Only 62 declined and 39 remained unchanged, indicating that the buying was spread across a large number of securities rather than being concentrated in a few stocks.

Market participants said the recent recovery was mainly to bargain hunting following the sharp correction, expectations of improved gas supplies to industries, stronger buying in banks and other active sectors, and improved investor sentiment following Moody's decision to revise Bangladesh's sovereign outlook.

The market began recovering after the DSEX fell to 5,379 on 14 September following several sessions of decline. Since then, investors have increasingly returned to beaten-down stocks, taking advantage of lower prices.

EBL Securities, in its daily market commentary, said bargain hunters were accumulating beaten-down stocks as strong investor participation and broad-based buying supported the recovery. The brokerage, however, noted that concerns over the market's near-term trajectory and heightened geopolitical tensions in the Gulf region remained.

Expectations of improved gas supplies have also helped ease some concerns over the earnings outlook of industrial and manufacturing companies. Gas shortages have disrupted production and raised concerns about corporate sales and profitability. Recent assurances of improving supplies have therefore provided some relief to investors.

Meanwhile, Moody's revised Bangladesh's sovereign outlook from "negative" to "stable" while maintaining its long-term issuer rating at B2. Market analysts have cited the change as another factor that has supported investor sentiment in recent sessions.

Buying interest was particularly visible in the Textile, General Insurance and Bank sectors. Textile accounted for the largest share of turnover today at 24%, followed by General Insurance at 13.2% and Bank at 12%.

All sectors posted positive returns during the session. Mutual Fund gained the most, rising 2.8%, while Cement and Financial Institution each advanced 2.6%.

The recent decline in Treasury bill yields may have also encouraged some investors to reconsider their allocation to equities. According to Bangladesh Bank data, the compounded rate on 91-day Treasury bills fell from 9.46% on 8 September to 9.32% on 16 September. 

However, market participants do not see the decline in yields as a standalone explanation for the recent rally.

The breadth of the market has also improved significantly. On 15 September, 336 issues advanced, followed by 179 on 16 September and 259 on 17 September. The pattern suggests that the recent recovery has involved a wider range of stocks across different sectors.

Eastern Bank, Sharp Industries and IPDC Finance were the most actively traded stocks on Sunday.

Khan Brothers PP Woven Bag Industries topped the gainers' list, rising 9.88%, followed by ICB AMCL Sonali Bank First Mutual Fund, up 9.86%, and Prime Finance First Mutual Fund, which gained 9.75%.

Paramount Textile led the decliners, falling 4.31%. Rahima Food Corporation and Desh Garments each declined 2.88%.

The Chittagong Stock Exchange also closed higher. The CASPI gained 120 points to 14,856, while the CSCX advanced 85 points to 9,107. Turnover on the CSE stood at Tk10.10 crore.

The recent rally, however, will need to sustain higher turnover and broad-based participation to demonstrate whether the market's recovery can continue. Investors will also be watching corporate earnings, gas supply conditions and the persistence of investor confidence in the coming sessions.

EBL Securities said strong investor participation and broad-based accumulation had brought the benchmark index close to the 5,600 mark following its recent declines, although geopolitical and other market risks remained.