Stocks see best day in 12 weeks on institutional buying

Stocks jumped sharply on Tuesday in a broad-based rally on buying pressure mostly from institutional investors.

The benchmark DSEX index rose 103 points or 2% to settle at 5,281, posting its best day since January 14 this year when it gained 139 points.

All the sectors shined, led by insurers registering the largest rally of more than 8%, driven by Islamic Insurance and Northern Insurance. Both the insurers hit the upper limit circuit breakers at 10%.

Out of 50 insurance companies, 44closed higher, one fell and five remained unchanged.

Telecommunications sector led by Grameenphone was the second best performer, followed by ceramic, cement and non-banking financial institutions.

Other indices, the Shariah-based DSES index gained 21 points or 1.85% to 1,204 and blue-chip DS30 was up 43 points or 2.42% to 1,988.

In two hours trading shortened from usual four-and-a-half hours due to coronavirus-induced lockdown, the turnover stood at just over Tk 500 crore, backed by the general insurance sector that made up 26.8% of the total turnover.

The institutional buyers pumped huge funds on stocks, leading to increase in turnover and indices, according to a top stockbroker.

The market was in free fall over the past three weeks until on Monday when it bounced back spurred by raising margin loan ratios.

Institutional investors were expected to support the falling market, but they behaved like day traders, he said. Some big investors took advantage of the coronavirus situation, he added.

“Shares of several companies were on the verge of forced sales. But regulator’s measures on hiking margin loan rates saved me this time,” said small investor Mohsin Ahmed.

Professor Abu Ahmed, a capital market expert, told the Business Insider Bangladesh that there was a sort of uneasiness among investors because of the corona.

“They were even more terrified by the news of the lockdown. But the BSEC’s decision to increase the margin loan limit has dispelled their fears. They became active in the market again, which reflected in the market.”