Buoyant investors send stocks to new heights

The prime index of Dhaka Stock Exchange (DSE) surged to new heights yesterday thanks to increased participation of buoyant investors who have high hopes on the market going up even further.

The DSEX, the benchmark index of the country's premier bourse, advanced 81 points, or 1.21 per cent, to 6,842. This is the highest point to be reached since its inception in 2013.

The DS-30, the blue chip stock index, increased by 28 points to hit 2,451 at the same time.

"The market is rising mainly because investors are more confident and buoyant as well due to the low interest rates offered by the banking sector," said a merchant bank official.

Banks offer deposit rates ranging from 3 per cent to 5 per cent, which does not even cover the country's inflation rate. "So, people prefer to keep their funds away from banks and in the stock market, which offers a large number of lucrative investment opportunities," he said.

However, many people are investing in overvalued stocks without paying due diligence with regard to examining their potentials, he said.

"So, their stock choices may hamper their investments," he added.

Turnover, another important indicator of the market, grew 22 per cent to reach Tk 2,706 crore at the DSE, where 247 stocks advanced, 96 fell and 33 remained unchanged.

"Investors dream that the index will continue to hit new highs this year as the money market has huge liquidity. So, they are buying stocks," said a stock broker.

And even though the index may go up further, investors should remain cautious of overvalued stocks, he said.

"It is also true that many stocks are still lucrative, where people can invest," he added.

The market has been in a rising trend for several months now and turnover is also higher as a result.

"This means the money flow is good enough," said Iftekhar Ali, a stock investor.

As long as turnover remains high, the market will not fall, he said. "So, I'm investing my funds," he added.

Responding to a query, the investor said the overall market was not overvalued but he was cautious of certain stocks.

Aziz Pipes, a B-category stock with a paid-up capital of Tk 5 crore, topped the gainers' list yesterday, rising 10 per cent to Tk 130 per share after news broke that the company would resume production from October 1 this year.

Aziz Pipes halted production in January earlier this year due to the Covid-19 fallouts, which led to an increase in prices of raw materials amidst a fall in supply.

Stocks of Beximco were traded the most, worth Tk 153 crore, followed by LafargeHolcim Bangladesh, First Security Islami Bank, IFIC Bank and LankaBangla Finance.

Malek Spinning Mills shed the most, losing 4.36 per cent, followed by Pioneer Insurance Company, Reliance Insurance, Safko Spinning Mills, and Fu-Wang Ceramic Industry.

Chittagong Stock Exchange (CSE) also soared yesterday, when the CASPI, the general index of the port city bourse, edged up 208 points, or 1.05 per cent, to 19,921.

Among the 324 stocks to undergo trade, 218 rose, 83 fell and 23 remained unchanged.