Stocks leap on CRR reduction
Dhaka stocks yesterday gained 2.67 percent -- the highest since May 25, 2015 -- on the back of the central bank's announcement to lower the requisite cash reserve ratio (CRR) to 5.5 percent from 6.5 percent to ease the financial sector's liquidity crunch.
DSEX, the benchmark index of the premier bourse, rose 149.69 points to finish the day at 5,747.14 points. This is the second straight session of gain for the DSEX.
At least Tk 12,000 crore will come into the financial sector because of the lowering of the CRR, said Mostaque Ahmed Sadeque, president of Dhaka Stock Exchange Brokers' Association.
The CRR is a specified minimum fraction of the total deposits that banks must hold as reserves either in cash or as deposits with the central bank.
The Bangladesh Bank governor has agreed to redefine what constitutes as banks' capital market exposure, according to Sadeque. "These are swelling investors' confidence," he added.
Investor sentiment has remained positive and buoyancy prevailed throughout the session following the government's move to allow state-owned enterprises (SoEs) to deposit 50 percent of their funds, up from 25 percent, in private banks, said EBL Securities in its daily market analysis.
About Tk 50,000 crore can flow into the banking sector if the SoEs deposit their money, said Mohammed Rahmat Pasha, managing director and chief executive of UCB Capital Management.
In that case, the interest rate on deposits will come down to 6-7 percent, which will then influence people to invest in the capital market, he added.
Turnover, another important indicator of the market, declined 6 percent to Tk 441 crore, with 15.22 crore shares and mutual fund units changing hands on the DSE.
Of the traded issues, 298 advanced, 25 declined and 15 remained unchanged on the premier bourse.
LankaBangla Finance dominated the turnover chart with its transaction of 59.45 lakh shares worth Tk 18.50 crore, followed by Beximco, Monno Ceramic, Mercantile Bank and Brac Bank.
Among the major sectors, financial institutions advanced 4.4 percent, followed by banks at 4.2 percent, textile 3.7 percent and engineering 2.1 percent, while tannery declined 0.36 percent.
Shasha Denims was the day's best performer, posting gain of 9.66 percent, followed by Premier Leasing, Usmania Glass, Olympic Industries and First Security Islami Bank.
Nitol Insurance was the day's worst loser, shedding 12.12 percent, followed by Vanguard AML Rupali Bank Balanced Fund, CAPM IBBL Islamic Mutual Fund, Wata Chemicals and Takaful Islami Insurance. Chittagong stocks also soared yesterday, with the bourse's benchmark index, CSCX, increasing 1.32 percent, or 294.99 points, to finish the day at 10,698.60 points.
Gainers beat losers as 208 advanced and 25 declined, while 5 securities finished unchanged on the Chittagong Stock Exchange. The port city bourse traded 86.60 crore shares and mutual fund units worth Tk 30.21 crore in turnover.