Weekly stock market analysis

Stocks extend losses for 2nd straight week

Turnover slumps 38pc on premier bourse

| Updated: October 25, 2017 00:51:48

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Stocks extended the losing streak for the second straight week that ended Thursday as cautious investors continued their selling binge amid mixed earnings and dividend declarations.

Brokers said small investors were cautious about fresh exposure to the market, while institutional investors continuously injected money into stocks, pulling the average daily turnover below the Tk 6.0 billion-mark after three months.

"Profit taking and cautious trading amid ongoing quarter-end earnings and year-end dividend declarations pushed the DSEX into the red," said an analyst at a leading brokerage firm.

He noted that notable selling pressure was observed on the banking and telecom issues as the central bank is now investigating the stock market activities of another eight banks.

The week witnessed five trading sessions as usual. Of them, two sessions closed red with a combined loss of 62 points while three sessions saw a combined gain of 37 points.

Week-on-week, DSEX, the prime index of the Dhaka Stock Exchange (DSE), which replaced the DGEN in four-and-a-half-years back, went down by 24.85 points or 0.41 per cent to settle at 6,039.

The two other indices -- the DS30 index and the DSE Shariah Index (DSES) - also followed the suit to close at 2,188 and 1,329 points, after losing 9.17 points and 4.25 points respectively.

The port city bourse, Chittagong Stock Exchange (CSE), also fell with its Selective Categories Index, CSCX, shedding 48 points or 0.42 per cent to settle at 11,330.

"Mixed earnings and corporate declarations from some listed companies have failed to satisfy investors' expectation that resulted in selling frenzy," commented EBL Securities in an analysis.

AT Capital Partners, an asset management company, said, "Bearish sentiment on the market remained intact as DSEX, the broad index of the major bourse, rotated the direction several times throughout week".

Bearish sentiment was also reflected in the turnover activities as the total turnover for the week came down to Tk 28.68 billion on the DSE from Tk 46.22 billion in the week before.

The daily turnover averaged at Tk 5.74 billion, which was 38 per cent lower than the previous week's average of Tk 9.24 billion. It was also the lowest average daily turnover in the past three months since June.

The baanking sector kept its dominance of the turnover chart, grabbing 35 per cent of the week's total transactions, followed by financial institutions with 12 per cent and engineering 10 per cent.

International Leasing Securities, a stockbroker, said, "The shaky investors persisted their sell-offs throughout the week to avoid further loss while some adopted "wait-and-see" stance amid ongoing quarter-end earning disclosures and year-end dividend declarations".

The stockbroker noted that sale of shares mostly from bank, telecom and ceramic sectors contributed to the fall in indices.

However, the bargain hunters chose to bet on lucrative price levels of cement, engineering, food, textile and fuel & power sector stocks, the stockbroker said.

A total of six listed companies, including Square Pharmaceuticals, recommended dividend last week between 10 per cent and 42.50 per cent for the year ended on June 30, 2017.

The total market cap of the DSE stood at Tk 4,076 billion at the end of the week, remaining unchanged over the previous week.

The gainers took a modest lead over the losers as out of 335 issues traded, 158 closed higher, 156 lower and 21 remained unchanged on the DSE trading floor.

IFAD Autos topped the week's turnover chart with 8.67 million shares worth Tk 1.28 billion changing hands. It was closely followed by Uttara Bank with Tk 1.07 billion, Brac Bank Tk 970 million, Aamra Networks Tk 928 million and LankaBangla Finance Tk 892 million.

Wata Chemicals was the week's best performer, posting 18.67 per cent gain while IFAD Autos was the worst loser with 21.69 per cent following its price adjustment after its record date for entitlement of rights shares.

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