Stocks make a comeback as recent news boosts investor confidence

Stocks rebounded strongly on Sunday, snapping out of a three-day plunge, as bargain hunters put fresh bets on lucrative shares in anticipation of potential turnaround after reappointment of the securities regulator chairman.

Professor Shibli Rubayat-Ul Islam has been reappointed as chairman of the Bangladesh Securities and Exchange Commission (BSEC) for another four-year term, according to a circular issued on Sunday.

The regulatory intervention narrowing the scope of individual stocks' decline a day to maximum 3 per cent from 10 per cent and a tough move against spreading rumours also helped stop the market erosion.

Three people were arrested on Friday night for circulating misinformation through social media platforms to influence or manipulate stock prices after the securities regulator had filed a case alleging the crimes.

Buoyed by the news, opportunistic investors took positions in selective stocks, particularly large-cap ones, which seemed lucrative after major price corrections.

Substantial price surge of large-cap stocks pulled the Dhaka Stock Exchange (DSE) key index by more than 97 points or 1.76 per cent to 5,615, after the index lost 156 points in the past three trading days.

Akramul Alam, head of research at Royal Capital, said investors showed buying appetite on selective large-cap stocks deemed too lucrative for investment. Moreover, reappointment of the securities regulator chairman for another term boosted investor confidence in the market, he added.

BAT Bangladesh, Square Pharmaceuticals, BRAC Bank, Beximco Pharma and IFIC Bank contributed largely to the Sunday's market jump. They jointly accounted for 35 points' rise of the day's index.

BAT Bangladesh had come down to a rational price level after 30 per cent correction since the removal of floor price, which promoted a section of investors to put fresh bets, said Mr Alam.

Echoing him, Md. Shakil Rizvi, managing director of Shakil Rizvi Stock, said investors bet on undervalued stocks for quick gains.

In a regular market analysis, EBL Securities said the market experienced dominance of buyers as the confirmation of the reappointment of BSEC chairman worked as a catalyst.

However, the news of the proposal to impose capital gain tax from the next fiscal year poses a threat to the continuation of this positive momentum in the forthcoming sessions, it said.

Institutional buying support added strength to the equity indices despite overall market sentiment still remaining subdued.

The blue chip index DS30, a group of 30 prominent companies, advanced almost 22 points to 1996 while the DSES Index, which represents Shariah-based companies, gained 17 points to 1,234.

Before the Sunday's rise, the key index of the DSE plunged 818 points while the market capitalisation shed Tk 884 billion since the removal of floor price in January, the DSE data shows.

Turnover, a crucial indicator of the market, on Sunday crossed Tk 6 billion-mark to Tk 6.14 billion, which was 20 per cent higher from the previous session.

Investors were mostly active in the pharmaceutical sector, which accounted for 20 per cent of the day's total turnover, followed by the textile sector (16 per cent) and food sector (14 per cent).

More than 75 per cent traded stocks saw price appreciation as out of the issues traded, 300 advanced, 52 declined and 44 remained unchanged.

The food sector saw the highest gain of 4 per cent, driven by BAT Bangladesh that jumped 5.7 per cent. It was followed by textile, non-bank financial institutions, telecom, and banking sectors.

Malek Spinning Mills dominated the turnover chart, with shares worth Tk 350 million changing hands, followed by Lovello Ice-cream, Asiatic Laboratories, and Orion Infusions.

BD Thai Aluminum was the day's top gainer, posting a 10 per cent increase, while ADN Telecom was the worst loser, shedding 2.98 per cent.

The Chittagong Stock Exchange also rebounded, with its All Shares Price Index (CASPI) rising 183 points to 15,999 and the Selective Categories Index (CSCX) gaining 114 points to 9,536.

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