Stocks hit 11-month high

Stocks closed higher for the second day in a row yesterday, with the main index of the Dhaka Stock Exchange (DSE) reaching the highest level in nearly a year.

The upward trend has raised optimism among some analysts but also sparked unease among many as some financially weak companies are dominating the list of top gainers.

Trading was also more active than the previous day.

The DSEX, the benchmark index of the DSE, gained 76 points, or 1.38 percent, to close at 5,594. This is the highest level since September last year, when the index stood at 5,624 points, according to DSE data.

Other indices also moved up. The Shariah-compliant index, known as the DSES, increased by 1.69 percent to 1,227.70, while the blue-chip index, DS30, which tracks the performance of large, well-established companies, rose by 1.70 percent to 2,193.72.

Despite the growth, industry experts are cautious as no 'A' category, those regarded as stable, or blue-chip stocks took place on the top five gainers' list.

Saiful Islam, president of the DSE Brokers Association of Bangladesh, said the market is suffering from a shortage of quality companies.

"There is no shortage of demand from investors in Bangladesh. The problem is on the supply side," he said.

He warned that if better-performing companies are not brought to the market, weaker ones will continue to dominate trading.

This, he added, is already happening, with so-called "junk" or loss-making firms regularly topping the daily gainers' list.

Yesterday was no exception. Bay Leasing and the National Tea Company, both categorised as junk stocks, rose by the maximum daily limit of 10 percent.

Evince Textile, a B-category stock with weaker fundamentals than leading firms, also advanced 10 percent. Shyampur Sugar Mills and Orion Pharmaceuticals, both considered junk shares, gained almost 10 percent as well.

"This is not a good sign," said Islam, adding that small investors are usually the ones who buy such shares and eventually suffer losses.

"If this trend continues, it could undermine confidence in the entire market. The regulator should continuously monitor what is happening in the trading of poorly performing companies," he said.

Meanwhile, turnover, the total value of shares traded and a key indicator of how active the market is, stood at Tk 1,296.43 crore, up from Tk 1,132.31 crore the previous day.

More than 325,000 trades were executed in yesterday's session, including block trades, which are large transactions carried out privately between big investors, worth Tk 36.67 crore across 31 scrips.

Overall, market breadth was positive, with 201 issues advancing, 141 declining, and 56 remaining unchanged.

Among the better-performing A-category companies, 105 rose, 83 fell, and 31 remained flat. In the weaker B-category, 38 rose and 33 declined. No shares were traded in the N-category, which includes newly listed firms.

Looking at different investment products, the picture was mixed. Mutual funds had seven gainers against 17 losers. In the bond market, one corporate bond fell, while among government bonds, one rose and one declined.

On the individual front, Bay Leasing & Investment was the day's biggest winner. At the other end, People's Leasing and Financial Services fell by 6 percent, making it the worst performer of the session.

The CASPI, the key index of the Chittagong Stock Exchange, surged 1.51 percent, or 232 points, to 15,598. At the port city bourse, 160 stocks advanced, 70 dropped and 30 remained unchanged.