Stocks soar on buying spree

Stocks surged yesterday on the back of a buying spree from retail investors.

The DSEX, the benchmark index of Dhaka Stock Exchange, soared 32.83 points, or 0.82 per cent, to close at 4,034.65. This is the highest single-day increase since May 31 when the index rose 51 points.

"This is a significant jump because more than 100 stocks rose. This has happened for the first time since the floor price was set," said a top official of a merchant bank.

On March 19, the stock market regulator set the floor price for all stocks based on the average prices of the previous five days in order to stop the expected rout caused around the world by the coronavirus pandemic.

As expected, the index did not fall due to the floor price. But it also did not rise either because of lower demand.

Yesterday, the key index rose riding on the news that directors, who have less than 2 per cent shares in a company, would have to buy shares to fulfil the minimum shareholding condition, the merchant banker said.

The Bangladesh Securities and Exchange Commission ordered the directors to buy the shares last week, otherwise, it would vacant their directorship.

So the companies, whose directors have failed to hold the minimum shares, attracted investors.

In 2011, the regulator ordered the directors to hold at least 2 per cent shares in their company to keep the position. Janata Insurance and Paramount Insurance were among the top gainers, advancing 10 per cent and 9.98 per cent respectively.

Banking and pharmaceuticals stocks also contributed to the rise of the market. Some medicine-makers announced earnings and subsequently advanced, pulling investors.

The central bank's recent directive on easing foreign investment also created a positive impact, said a stockbroker.

Foreign investors would be allowed to park their dividend income from listed companies in foreign currency (FC) accounts opened with the country's banks and they would be allowed to remit the funds to their home countries.

Investors would also be permitted to invest the balance in the FC accounts to purchase securities.

The move aims at retaining the existing foreign investors' funds and drawing more foreign investment in the days to come, said the broker.

"It would impact the market positively."

Stocks traded the most in the day was of Beximco Pharmaceuticals, whose securities involving Tk 17 crore changed hands, followed by Beacon Pharmaceuticals, Premier Bank and Orion Pharma.

On the day, 101 stocks advanced, 23 declined and 209 remained unchanged.