The Dhaka Stock Exchange’s benchmark (DSE) has posted a gain of more than 35% in the first nine months of this year as institutional investors put new funds into large-cap stocks.
The key DSEX index now maintains its firm position above the 7,000 point level as buoyancy has bolstered stock indices amid rising investor confidence, market insiders have said.
Since January 1, 2021, the DSEX has jumped 1,927 points or 35.67% to stand at 7,329 on September 30, the highest since its launch about nine years ago.
The DSEX, designed by Standard and Poor’s (S&P) on the basis of the free-float method, was introduced on January 27, 2013 to replace the key index at the time, the DGEN. The DGEN had hit its all-time high of 8,918 recorded on December 5, 2010, when the market saw a bull run before a crash.
Two other DSE indices also skyrocketed during the nine-month period. The blue-chip DS30 index, which is made up of 30 leading companies, gained 38% or 747 points to end at 2,710 while the DSE Shariah index climbed 28% or 350 points to close at 1,592 on the 30th. September.
The market capitalization of the stock market premium also rose by Tk 1,333 billion, or nearly 30 percent during the period under review, to reach Tk 5,815 billion on Thursday, the last trading day in September.
Daily turnover, another important criterion, stood at around Tk 20 billion on average over the January-September period.
Market analysts said that while the stocks of many underperforming companies experienced unusual price increases during the period under review, large-cap stocks contributed the most to the index’s rise.
Many stocks with poor dividend payout records and rising insurance stocks have jumped three to four times this year, but their contribution to the index was insignificant, an analyst at a major brokerage firm said. .
The main positive contributors to the index were Beximco, Investment Corporation of Bangladesh, Beacon Pharma, LafargeHolcim, Beximco Pharma, United Power, Walton and Grameenphone. , which ultimately pushed the index higher.
Funds from institutional investors also continued to flow into the stock market as they took advantage of the central bank’s incentive program and actively invested, which caused the index to rise, Khairul recently told FE. Bashar Abu Taher Mohammed, CEO of MTB Capital. .
He noted that the improvement of the pandemic situation, the extension of the credit facility, the gradual economic recovery and the lowering of interest rates on bank deposits have helped to keep investor confidence at a high level.
“Many good issues are still lucrative, but investors should be careful when buying overvalued stocks in order to avoid any bad luck,” he added.
The market was mostly bullish during the period under review amid growing investor confidence, driven by various regulatory measures, which prompted investors to place their funds in equities, a stock broker said.
He said the corporate tax cut for listed manufacturing companies in the current fiscal year has further boosted investor optimism.
The Chittagong Stock Exchange (CSE) also performed well in the nine months ended September 30, 2021, with the CSE All Share Price Index (CASPI) up 5,785 points to 21,377 and the selective categories index (CSCX) up 3,432 points to close at 12,835 on September 30.