Weekly analysis: Stocks keep sliding as pessimism lingers

Stocks continued its losing streak for the second consecutive week that ended on Thursday, reflecting a lack of investors' confidence in the likelihood of a turnaround.

Of the five trading days in the outgoing week, the first four sessions closed lower while the last one saw the index finish higher.

Week on week, the DSEX, the prime index of the Dhaka Stock Exchange (DSE), settled 45 points or 0.85 per cent lower at 5,230.

Market analysts said investors extended their selling binge amid ongoing liquidity crunch in the money market while many others have adopted a cautious stance in the holy month of Ramadan.

The financial sector remained volatile as liquidity crunch, soaring interest rate and huge non-performing loans coupled with pressure on the exchange rate spilled over into the capital market, said a leading broker.

Even the government's market-supportive measures, including redefining of the banks' capital market exposure to increase the fund flow to the capital market, have failed to attract investors, he said.

As per the new policy decision of the government, the Bangladesh Bank has widened the banks' scope to invest in the stock market and infrastructural fund.

On Thursday, the central bank issued a circular saying that banks' investment in non-listed securities would not be counted as their capital market exposure.

The government also extended the tenure of the capital market refinancing scheme up to December 31, 2022.

Two other indices of the premier bourse also ended lower. The DS30 index, comprising blue chips, fell 33 points to finish at 1,818 and the DSE Shariah Index lost 23 points to close at 1,197.

The total turnover on the DSE stood at Tk 14.61 billion, down from Tk 21.45 billion in the week before.

The daily turnover averaged out at Tk 2.92 billion, registering a decline of 32 per cent over the previous week's average of Tk 4.28 billion.

The block trade contributed 4.0 per cent to the week's total turnover, with stocks like Islami Bank Bangladesh, Mutual Trust Bank, Grameenphone, Jamuna Bank and Bank Asia dominating the block trade board.

According to the International Leasing Securities, the investors mostly remained on the sidelines amid ongoing gloomy market.

Most of the major sectors saw correction, with telecommunications posting the highest loss of 2.60 per cent, followed by food (2.55 per cent), pharmaceuticals (2.21 per cent), engineering (1.66 per cent) and non-bank financial institutions (0.45 per cent).

The banking sector witnessed the highest gain of 0.78 per cent, after the news that most of the listed banks saw their earnings per share rise in January-March quarter of 2019, followed by the power sector (0.33 per cent).

The market capitalisation of the DSE also fell 0.96 per cent to Tk 3,848 billion on Thursday from Tk 3,885 billion in the week before.

Losers outnumbered the gainers, as out of 350 issues traded, 195 closed lower, 122 ended higher and 33 issues remained unchanged on the DSE floor.

The Fortune Shoes dominated the turnover chart, with 19.48 million shares worth Tk 733 million changing hands. The company accounted for 5.02 per cent of the week's total turnover.

The United Insurance was the week's best performer, posting a gain of 13.93 per cent while SS Steel became the worst loser, plunging 10.18 per cent.

The port city bourse, Chittagong Stock Exchange (CSE), also ended lower, with the CSE All Share Price Index -- CASPI -- losing 185 points to settle at 16,001 and the Selective Categories Index -- CSCX -- shedding 113 points to finish at 9,687.