Stocks jump for cuts in bond, savings interest rates

Shares on the Dhaka Stock Exchange rose for the second consecutive day yesterday thanks to the investors' sustained optimism and a cut in the interest rate on savings certificates and wage-earners development bonds.

The DSEX, the benchmark index of the premier bourse in the country, advanced 52 points, or 0.73 per cent, to close the day at 7,258.

The gain took the index to its highest level, first touched on September 9.

If the rate of return on bank deposits, savings instruments and other investment tools is slashed, it bodes well for the stock market as investors rush to the equity market, said a top official of a merchant bank.

The decision to bring down the interest rate on savings certificates and wage-earners development bonds had a positive impact on the market, he said.

For the new investment of more than Tk 15 lakh in the savings certificates, the interest rate has been reduced by 1 to 2.28 percentage points.

The yield would be 10.27 per cent instead of 11.20 per cent for a fresh investment of Tk 15 lakh in the wage earners development bond, according to a circular of the Internal Resources Division.

If the investment amount crosses Tk 30 lakh, the interest rate would be 9.33 per cent. It will be 8.40 per cent for the investment of more than Tk 50 lakh.

Investors' increased participation coupled with growing optimism caused the premier exchange to exhibit a shining session, said International Leasing Securities in its daily market review.

This is in response to the government's initiative to lower the rate of return on savings schemes.

The market also soared amid positive expectations about the performance of the listed companies in the upcoming quarter as the devastating impacts of the coronavirus pandemic on the economy are petering out.

Pacific Denims topped the gainers' list after it rose 9.86 per cent, followed by International Leasing, Alif Industries, Premier Leasing, and Tung Hai Knitting.

Turnover rose 8.3 per cent to Tk 1,910 crore compared to Tk 1,762 crore a day earlier.

Most of the investors had been in a profit-booking mode in the last few weeks so the index had fallen, said a stockbroker.

"Now, the index is soaring again as some people are buying stocks."

Reliance One, a mutual fund, gave up the most, falling 6.26 per cent, followed by ICB AMCL Second Mutual Fund, Eastern Lubricants, National Housing Finance and Investments, and BD Lamps.

On the DSE, 224 stocks rose, 117 declined, and 35 remained unchanged.

Beximco Ltd was the most-traded stock with its shares worth Tk 144 crore changing hands. Beximco Pharmaceuticals, Alif Industries, LafargeHolcim Bangladesh, and Saif Powertec also saw higher trade volumes.

The CASPI, the general index of the Chattogram Stock Exchange, added 210 points, or 0.99 per cent, to end the day at 21,240.

Among 327 stocks traded, 194 advanced, 100 fell, and 33 were unchanged.