Stocks rise on mutual funds' gain

Mutual funds that shone bright last week jumped 9.5 percent despite a sharp fall in prices on the last trading day.
However, during the month of Ramadan beginning from today, trading on the premier bourse will start at 10:30am instead of usual 10:00am and continue till 2:00pm, while trading hours for spot market will be from 10:30am to 1:00pm.
The mutual funds rose on expectations of a court verdict on a case, which was filed a year ago to challenge a ban on declarations of stock dividends, analysts said.
The court heard the case on Wednesday and set October 14 for the next hearing.
The pending verdict however caused a sharp fall in mutual fund prices on Thursday, the last trading of the week.
"Mutual funds gained noticeably in recent times as investors have been hopeful of a positive outcome of the ongoing case at the High Court which has suspended distribution of dividends by the mutual funds," Equity Partners Limited (EPL), an investment firm, said in its weekly analysis.
Although the mutual funds account for only about two percent of the total market capitalisation, these attracted about 7.6 percent of the total turnover last week, the EPL analysis said.
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds and short-term money market instruments.
In August last year, the High Court Division stayed the stock market regulator's ban on the issuance of bonus shares or rights issues for closed-end mutual funds.
The HC also stayed the dividend declarations by all mutual fund managers until disposal of the case. The stay order came after three investors filed a writ petition with the HC challenging modifications of mutual fund rules by the Securities and Exchange Commission (SEC) in July.
In July last year, the SEC approved the changes in mutual fund rules that barred the closed-end mutual funds from offering bonus shares as dividends or right issues in a bid to increase their capital base.
The gain in the investment sector also led to a moderate rise in the price indices last week.
Benchmark index of the Dhaka Stock Exchange, DSE General Index, increased by 26.48 points, or 0.88 percent, to 3,027.94. The DSE All Share Price Index rose by 26 points, or 1.03 percent, to 2,546.55.
Banking sector lost almost two percent last week. Throughout the week, the banks had very small turnover -- 9.3 percent of the total turnover -- compared to their market capitalisation -- 31.2 percent.
Non-bank financial institutions (NBFIs), on the other hand, gained almost three percent, enjoying the highest turnover of the week -- 13.2 percent.
The investors were expecting that the regulators are going to ask the NBFIs to increase their paid-up capital very soon.
Another major sector that gained significantly was the fuel and power sector, as the investors were more interested in the state-owned oil companies and BOC Bangladesh.
Insurance companies also passed a good week with large gains and healthy turnover. The investors were expecting that the reformed "insurance act" would be passed in the next parliament session shortly, the EPL analysis said.
The market's total turnover increased by 27.31 percent to Tk 3,639.99 crore last week, which had one more trading session than the previous week. The daily turnover rose by 1.85 percent to Tk 727.99 crore.
During the week, EBL First MF made its debut on both Dhaka and Chittagong bourses, while Bangladesh Online Limited, an IT arm of leading industrial conglomerate Beximco Group, was de-listed following its amalgamation with its parent company Beximco Limited.
The advancers beat the losers 148 to 94. Two securities remained unchanged. A total of 21,51,50,801 shares were traded on the premier bourse, marking a 23.24 percent rise.
Market capitalisation increased by 1.86 percent to Tk 1,31,380 crore.
Chittagong stocks also posted a gain last week. The CSE Selective Categories Index rose by 0.9 percent to 6,704.82 points. The CSE All Share Price Index increased by 0.91 percent to 10,655.37 points.
A total of 3,30,59,769 shares worth Tk 368.52 crore changed hands on the Chittagong Stock Exchange.