DSEX hits 15-month high, erasing pandemic-induced losses

Dhaka stocks extended their winning streak for the third day in a row on Sunday with the key index hitting over a 15-month high, wiping out losses from the coronavirus-induced sell-off.

Falling interest rates, rolling out stimulus packages and vaccine progress lifted investor sentiment, according to market analysts.

The DSEX index added over 31 points or 0.62% to settle at 5,126 — its highest since August 28, 2019, when it was 5,139. However, the index slipped into the red zone in the pre-opening for a while on profit-booking before surpassing the pre-pandemic level.

The rally was mainly led by telecommunication, cement, banks, and textile issues.

The rate on deposits fell to 4.73% in October from 4.79% in the previous month while the lending rate decreased to 7.67% from 7.79%, according to Bangladesh Bank.

Bankers hinted at further fall in interest rates, as the banks are now implementing the low-cost financial stimulus packages to help weather businesses from the Covid-19 fallout.

Bangladesh is expected to receive Covid-19 vaccines from India by January, according to the health ministry.

“These are the positive news, sending the market to a new high,” said a chief investment strategist at an asset management company. “As a whole, there are reasons to be optimistic.”

When interest rates decrease, it's cheaper for companies to borrow funds to achieve growth, and this may encourage stock prices to rise, he said adding that a decrease in interest rates prompts investors to move money from the banks to the stock market.

Other indices, the DSES index gained over 11 points or 0.94% at 1,180 and the blue-chip DS30 Index rose 23 points or 1.32% at 1,798.

The influx of new funds also helped increase the turnover that stood at more than Tk 1,003 crore. General insurance, pharmaceuticals, and banks made up almost half of the total turnover.

However, the losers outshined the gainers as out of 356 issues traded, 153 declined, 141 dropped and 62 remained unchanged.

IFIC Bank was the most traded stock with shares worth Tk67 crore, accounting for almost 10% of the total turnover. Its share prices gained 8.4% to Tk 12.9 despite its third-quarter negative earnings result.

It was followed by City Bank, Beximco Pharmaceuticals, Beximco, Rupali Insurance, Fortune Shoes, City Bank, and BATBC.

Maksons Spinning Mills Ltd was the highest gainer rising over 8% after the company said Maksons Group will set up three industrial units at a combined investment of $111 million.

Debutant Dominage Steel Systems continued to fly high as its share prices soared over 290% on its debut.