Dhaka stocks yesterday bounced back breaking a six-day losing streak, as institutional investors extended their support at the request of the capital market watchdog.
On the day, the stakeholders also sat with the Bangladesh Securities and Exchange Commission (BSEC) to discuss the current situation of the market.
The meeting identified that the market slump was down to the tussle between the telecom regulator and Grameenphone and the institutional selloffs to pay for the subscription fee of the initial public offering of Ring Shine Textile.
Market insiders say the regulator had informally requested the institutional investors, which include stock dealers, merchant banks, asset management companies and fund managers, to inject fresh funds into the market and refrain from going for selloffs.
Many well-performing stocks have become cheaper because of the slump in the last six consecutive days, prompting the institutional investors to increase their investment a little more.
As a result, the DSEX, the benchmark index of the premier bourse, added 26.64 points, or 0.53 percent, to close the day at 5,013.01.
Royal Capital, a merchant bank, said in its market analysis that the indices were bearish throughout the week because of a sell pressure mainly in telecom, financial institutions and banking stocks.
Investors, however, had been shaky after news surfaced that the Bangladesh Telecommunication Regulatory Commission (BTRC) would serve a show-cause notice to Grameenphone, asking the operator why its licence would not be revoked for not clearing dues.
The notice was also served on Robi—another mobile phone operator but not listed—after 5pm, over two hours after the closure of the market.
The stock of GP, the largest listed company in Bangladesh, however, rose 2.11 percent to Tk 295.50 on the day.
Some analysts explained that the operator’s stock has already fallen significantly, enough to absorb the potential impact on its earnings per share even if it has to clear the unpaid dues to the telecom regulator in future.
Foreign investors got rid of shares of the mobile operator yesterday also.
The recent liquidation of People’s Leasing and Financial Services, a non-bank financial institution, due to deterioration of its financial health and the possibility of some other financial institutions to suffer the same fate also left investors wobbly.
Turnover, another important indicator of the market, hit Tk 427.65 crore, up 13.90 percent from the previous day.
United Power Generation dominated the turnover chart, followed by IPDC, Fortune Shoes, Monno Ceramic, and Khulna Power, DSE data showed.
Tallu Spinning, one of the junk stocks, topped the gainers’ list with a rise of 10 percent. First Finance was the top loser shedding 6.25 percent.
Gainers outnumbered losers 192 to 97, while 63 stocks remained unchanged.
Among the major sectors, engineering rose 0.95 percent and textile gained 0.91 percent. The telecom sector fell 0.73 percent. Chattogram stocks also rose with the bourse’s benchmark index, CSCX, increasing 30.88 points, or 0.33 percent, to finish at 9,266.46.
Gainers beat losers as 130 issues advanced, 97 finished lower and 36 remained unchanged on the Chittagong Stock Exchange.
At the meeting at the BSEC office in Agargaon, the representatives of the DSE, the CSE, merchant bankers and stock brokers were present.
BSEC Chairman M Khairul Hossain, who presided over the meeting, assured the participants that he would discuss the GP issue with the BTRC.
He hoped that banks would invest in the market in the upcoming weeks as they have been instructed to do so by the Bangladesh Bank by maintaining the exposure limit.
As the IPO subscription date for Ring Shine Textile is ending on September 8, institutional investors will not have to sell much to raise funds. As a result, they will not go for selloffs, said a stock broker, who attended the meeting.