Stocks ended nearly flat in the week to Thursday after a three-week rally as investors tried to rebalance their portfolios taking cues from the latest quarterly earnings reports.
Investors mostly opted for profit-booking on rallied stocks while some others showed buying interest in sector-specific issues with potentials to declare higher earnings.
Of the five trading days this week, the first three days suffered losses owing to dismal financial performance of most companies while the last two days' gains pared almost all the losses.
Eventually, DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), settled at 6,295, with a fall of 1.52 points, after gaining 102 points in the past three weeks.
However, few blue-chip stocks were actively traded as their current market prices proved lucrative to investors. Accordingly, the DS30 Index, comprising blue-chip companies, managed to inch up by 0.03 points to close at 2,231.
Market operators said although the market edged down, the recent improvements in macroeconomic indicators, such as narrowing trade deficit and rising exports and remittances and receiving the first tranche of IMF loan will help boost the investors' confidence in the coming days.
Bangladesh received the first tranche on Thursday, amounting to US$476.17 million, of the International Monetary Fund (IMF)-approved $4.7-billion loan.
Remittance also hit a five-month high to $1.95 billion in January. The country's external position improved as the trade deficit narrowed by 21 per cent in the first half of FY23.
Moreover, the export earnings grew by 5.89 per cent to US$ 5.13 billion year-on-year in January this year defying all challenges.
The Bangladesh Bank on Thursday relaxed the rules on the provisioning of bank loans to brokerage houses, merchant banks, and stock dealers which market operators believe will increase the fund flow in the capital market.
Md Sajedul Islam, senior vice president of the DSE Brokers Association of Bangladesh, said this is good decision as banks will feel encourage to invest in the market through their subsidiaries.
It will create a level-playing field in the financial market, he said, adding that this will help raise the volume of investment in the market.
The investors rebalanced their portfolios in response to the earnings disclosures of the listed companies for the most recent quarter, according to EBL Securities.
"Investors opted for profit-booking as the majority of the listed companies showed dismal earnings in the latest quarter, mainly due to the prevailing macroeconomic challenges".
Though the bargain hunters tried to revive the current bearish trend of the index by taking position on services, IT, food & allied and ceramic sectors' stocks but the heavy selling pressure in life insurance, paper, general insurance and textile sectors battered the buyers' attempt.
About 90 listed firms published quarterly financial reports during the week. Most of the companies posted lower profit year-on-year for the October-December 2022 quarter.
The investors showed their buying interest in sector-specific issues whose performance was not affected by recent macroeconomic adversities and provided a modest recovery to the market in the last two days of the week.
For example, Olympic Industries was the week's top gainer, soaring 14 per cent after the leading biscuit maker's profit jumped 46 per cent year-on-year to Tk 1.05 billion in six months through December 2022.
Orion Infusion, which was the week's second top gainer with 10.82 per cent gain, also posted a 54 per cent EPS growth to Tk 0.40 in the Q2 of FY23.
Eastern Housing and Unique Hotel posted higher profits in the October-December quarter. Accordingly, investors showed their buying interest on their shares during the week.
The low-cap IT sector kept its dominance in the weekly turnover list, capturing 24 per cent of the weekly turnover, followed by pharmaceuticals (10 per cent) and life insurance (9 per cent).
Investors' participation in the market also dropped to Tk 28.40 billion in total, a 7 per cent lower over the week before, owing to cautious reaction to a staggering hike in fuel and energy prices.
As a result, the average daily turnover stood at Tk 5.68 billion as against Tk 6.10 billion in the previous week.
Buyers had been concentrated on selective stocks while the majority of stocks remained stuck at the 'floor price' level. Of 385 issues traded, 208 remained unchanged, 124 declined while 53 advanced on the DSE floor.
Genex Infosys became the week's turnover leader with shares worth Tk 3.0 billion changing hands, followed by Bashundhara Paper Mills, Eastern Housing, Aamra Networks and Bangladesh Shipping Corporation.
However, the Chittagong Stock Exchange (CSE) edged higher with the CSE All Share Price Index (CASPI) rising 18 points to settle at 18,583 and its Selective Categories Index (CSCX) gaining 10 points to close the week at 11,139.