The Financial Express

Weekly market review

Stocks stage cautious rally in earnings season

Turnover drops 21pc

| Updated: February 01, 2023 09:21:24

Stocks stage cautious rally in earnings season

The benchmark equity index notched a third week of gains on Thursday, as cautious investors hunt for sector-specific shares that are expected to be somewhat protected from earnings volatility amid macroeconomic adversities.

Investors showed their buying interest in selective stocks from IT, insurance and travel & leisure sectors that declared higher than expected quarterly earnings.

The medium-cap stocks such as Dhaka Insurance, Sea Pearl Beach, Unique Hotel & Resorts, Eastern Housing and Olympic Industries led the benchmark index gain during the week.

Eastern Housing and Unique Hotel posted higher profits for the July-December quarter, which prompted investors to chase their stocks during the week.

Eastern Housing raked a Tk 292 million profit in July-December of the current financial year, up 18.58 per cent year-on-year, while Unique Hotel & Resorts made Tk 294 million profit, a 270 per cent jump year-on-year.

Of the five trading days this week, the first session suffered losses while the four others managed to edge higher amid modest volatility.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), settled at 6,296, with a gain of 30.81 points, or 0.49 per cent. The index added around 102 points in the past three weeks.

The investors chased sector-specific issues ahead of the upcoming earnings disclosure season that were perceived to overcome macroeconomic headwinds, said EBL Securities.

However, the market notched sell pressure from investors on a majority of issues, owing to concerns over dismal financial performance due to recent macroeconomic adversities, including a record hike in fuel and energy prices, said the stockbroker.

Some investors also rebalanced their portfolios during the week ahead of the upcoming earnings disclosure season, it added.

The optimistic investors showed their buying appetite for sector-specific stocks amid declaration of quarterly earnings, according to International Leasing Securities.

Though the market remained slow in the first session of the week, the IT sector got back its momentum in the last four sessions with the declaration of quarterly earnings, said the stockbroker.

The recently announced monetary policy and the regulators' efforts to ease the banks' capital market exposure have created some optimism among investors.

The central bank unveiled an accommodative but cautious monetary policy for the second half of the 2023, aiming to achieve maximum growth with curbing inflationary pressures on the economy which helped to boost the investors' confidence.

General investors seemed to be encouraged to put bets on some oversold stocks because of the regulator's assurance to keep the 'floor price' in place for now, according to a stockbroker.

Investors' participation in the market, however, dropped to Tk 30.50 billion in total, a 21 per cent drop over the week before, owing to cautious reaction to a staggering hike in fuel and energy prices.

As a result, the average daily turnover stood at Tk 6.10 billion as against Tk 7.70 billion in the previous week.

The low-cap IT sector kept its dominance in the weekly turnover list, capturing 18 per cent of the weekly turnover, followed by general insurance with 15 per cent and life insurance 13 per cent.

Major sectors posted mixed performances while travel & leisure posted the highest gain of 16.6 per cent as the two travel & leisure sector companies featured in the weekly gainers' list.

Buyers had been concentrated on selective stocks while the majority of stocks remained stuck at the 'floor price' level. Of 387 issues traded, 205 remained unchanged, 119 declined while 63 advanced on the DSE floor.

Genex Infosys became the week's turnover leader with shares worth Tk 2.20 billion changing hands, followed by Bangladesh Shipping Corporation (Tk 1.30 billion), Aamra Networks (Tk 1.18 billion), Bashundhara Paper Mills (Tk 1.13billion) and Sea Pearl Beach Resorts (Tk 931million).

Two other indices of the DSE also ended higher. The DS30 Index, comprising blue-chip companies, advanced 22 points to close at 2,230 and the DSES Index gained 6.81 points to finish at 1,374.

The Chittagong Stock Exchange (CSE) also ended higher with the CSE All Share Price Index (CASPI) rising 89 points to settle at 18,566 and its Selective Categories Index (CSCX) gaining 57 points to close the week at 11,129.

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