FE Report
Daily trade turnover on Dhaka Stock Exchange (DSE) scaled Tk 20-billion mark Tuesday, for the first time in six years, as investors put fresh stakes on stocks.
Turnover, a crucial indicator of the market, stood at Tk 20.64 billion on the country's premier bourse, climbing further by 11 per cent over previous day's mark of Tk 18.56 billion.
It happens to be the biggest single-day transaction in the last six years since January 25, 2011, when the turnover totaled a record Tk 20.64 billion.
The new year dawned with an upturn in the capital market, as the premier bourse on January 01 featured a turnover of above Tk 9.93 billion. And after 11 sessions, the value stood above Tk 20.64 billion-a sharp 120 per cent or Tk 10.71 billion higher than the turnover observed on January 01.
Attuned to the rising turnover value, DSEX, the prime index of the DSE, continued to hold its soaring momentum, adding 97.61 points more to settle at a historical high of 5,575.47 points since its inception on January 28, 2013.
DSEX added nearly 418 points in the past seven consecutive sessions.
Market analysts, as such, sense some matters of concern as the market is witnessing continuous rally without any 'correction'.
Former chairman of the securities' regulator Dr AB Mirza Azizul Islam said the scale of rise in index and turnover is a matter of 'concern'.
"There are some factors to be concerned about as the market is advancing without any correction," Dr Islam said. However, he is not greatly worried as the index "still is not over-priced".
He said the price hike in 'Z'-category shares is also another matter of concern, and investors should remain cautious.
According to DSE information P/E (price earning) ratio of some companies swelled abnormally following the continuous rise in their prices.
On an apparent note of caution, the securities' regulator Monday asked the lenders not to provide margin loans against the securities having P/E ratio above 40.
The regulator also instructed the market intermediaries to abide by existing rules and regulations.
According to DSE information, the trading volume and market capitalization of DSE also recorded an all-time high Tuesday. Trading volume came to 701.22 million while total market capitalisation recorded Tk 3,695.02 billion.
Shahidul Islam, managing director of VIPB Asset Management Company, noted that the market had remained underpriced for a long time.
"But the continuous rise of the market is a matter of moderate concern. The prices of some low- fundamental companies rose abnormally, and eventually such prices will not sustain," he said.
Market-insiders said investor enthusiasm sustained as local and foreign investors remained active on the market amid optimism, taking the market turnover to a six-year high.
"The rally has been largely supported by high market liquidity and fundamental stocks like banks, NBFI and power stocks that had been the main engine behind the day's charge on the DSEX and turnover," said an analyst at a leading brokerage firm.
He said consolidation of stock prices, comparably high corporate earnings, low commodity-and oil prices on the international market alongside low interest rates on bank deposits were the major props behind the ongoing rally. "However, the investors should carefully invest in a rising market and should analyse the fundamentals of securities beforehand," he said.
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