Stocks in fall again after a two-day rise

Moves to boost the stock investors confidence seems not enough as the market has faced another round of sell pressure from momentum traders with an intention to book petty profits sooner.

DSEX, the broad index at the Dhaka Stock Exchange, on Tuesday, lost 41.5 points immediately after a gain of 144 points over the first two session of the week.

The gain is believed to have been an instant market reaction of the latest round of policy supports that include Bangladesh Bank's offer to the commercial banks to provide low-cost funds for buying shares.  

Analysts said to the Business Standard after Tuesday trading that central Bank's circular offered low cost liquidity to the commercial banks only for a six month period.

Banks know well that investing such a short-term borrowed fund into a volatile stock market will not be a wise decision and that would be a high risk taking investment approach, said a market analyst at a top brokerage firm.

"What if, the market goes further down and after six months the banks are bound to pay it back to the central bank? The question is more significant in current situation of banks' investment portfolio with losses", said the analyst seeking anonymity.

According to bankers, most of the banks are capable to invest into shares as their current exposure in the stock market is below the central bank approved ceiling.

A confidence on the market with ensuring positive outlook is a must to secure the maximum of buy orders from banking industry, suggested the analyst working at a bank-subsidiary brokerage house.

However, he is optimistic about the upcoming quarter as improved market sentiment "should add to the indices".

Thanks to the Finance Minister's intervention to solve the most-talked dispute among two top telecom operators and the telecom regulator and tax authority over disputed unpaid audit claims.

Grameenphone, the biggest listed company in terms of market capital are in a pressure to pay audit claims of Tk  12880 crore, that equates to the company's three years' net profit after tax.

Finance Minister AHM Mustafa Kamal on last Thursday met all the parties and declared of an amicable solution within three weeks.

Following the declaration Grameenphone shares at the local stock exchanges have gained more than 16 percent this week that added more than 26 points to the DSEX.

The broad index on Tuesday came down to 4,958 from a level of 5,000 points in the previous day, a 0.83 percent fall over the session.

DSES, the index of shariah-compliant securities at the premier bourse fell 1.1 percent while the blue-chip index DS30 fell 0.88 percent.

Investors' watchful attitude reduced turnovers at both the stock exchanges of the country. DSE on Tuesday recorded a total buy-sell of Tk 405 crore, 21.6 percent down from the previous day.

At the Chittagong Stock Exchange (CSE) trading decreased over 11 percent to come down to Tk26.56 crore.

214 of the traded scrips at the DSE has lost price against rise of 103 only while price of 34 securities remained unchanged. At the CSE 79 securities gained against fall of 153.

Except General insurance and mutual funds all the sectors was pushed into negative territory yesterday. Engineering, fuel and power, food and allied, jute, nonbanking financial institutions, paper and printing, pharmaceuticals and chemicals, tannery, telecom and textile sector have lost market capital over 1 percent.

Broad based market indicators suggest a cheaper price level of securities as the price to annualized earnings per share (Annualized PE) ratio of the listed securities on an average came down to 14.74 percent, while the trailing PE for the same came down below 14 percent.

Trailing PE is calculated based on aggregated earnings per share of last four quarters.

The average dividend yield at the DSE that divides annual cash dividend by market price has grown to 2.84. Meanwhile, the price to book value ratio suggests that listed securities are at a price level which is double to their net asset value on an average.

The stock market of Bangladesh is in a downward spiral from February that leads the DSEX to lose 7.9 percent till date this year.