Stock market cap hits record high

The stock market has risen to new heights with market capitalisation hitting a high point last week while overvalued shares still remaining a concern.

Market capitalisation at Dhaka Stock Exchange (DSE) reached a record high of Tk 509,937 crore on Thursday. Similarly, the DSE's daily average turnover rose by around 19 per cent to Tk 2,438 crore for the week, which is the second highest since peaking in 2010, as per market data.

However, tensions remain over some insurance stocks that saw their values grow significantly, if not tripling, in the last few months, according to market analysts.

The big news is that people are coming out to invest now, but they need to invest in fundamental stocks, they said. Among all sectors, textiles rose the highest by 10.2 per cent last week.

"Thanks to the market's prolonged bearish trend, textile stocks were at a lucrative level. So, investors are thinking that the sector will give a good return after the pandemic," said a top official of an asset management company. "What is more, cotton prices rose in the last few months so those who have a good stock of the material will see good profits," he added.

Cotton was being traded at an average of $0.60 per kilogramme during the June-December period in 2020 while it later ranged between $0.95 and $1.7 in March this year, according to data from Bangladesh Textiles Mills Association.

The banking sector did, however, witness a correction of 5 per cent after a week-long rising trend.

"But this is normal," he said.

Investor participation is currently very high so turnover, an important indicator of the market, is hovering at the Tk 2,500 crore level.

"The market is going good but some stocks that rose abnormally are the only cause for concern," said Sharif Anwar Hossain, president of DSE Broker's Association (DBA).

Investors need to be careful and invest in fundamental stocks so that they do not face any trouble for investing in overvalued stocks.

"To save their own money, investors will have to analyse and take the right decisions," Hossain added.

Institutional investors are pouring money into the stock market due to the interest rates being low in the banking sector.

People also have more confidence in the new commission, which was encouraging them to buy stocks.

When the market rises, many people get back their confidence.

"So, some general investors are also coming to the market now seeing the rise in the index," said a broker.

The DSEX, the DSE's benchmark index, rose to 6,066.64 points at the end of last week.

The index crossed and has been hovering at the 6,000 level since 2017, showed the DSE data.