'After the sharp fall in the index, the market looks much cheaper in terms of market P/E ratio, which is around 10 or less than 10 at this stage'
After the record breaking fall on Monday, the key index of Dhaka Stock Exchange (DSE), DSEX, made a partial recovery on Tuesday with gain of 148.27 points or 3.69%.
DSEX closed at 4,156.3 points on Tuesday after gaining 3.7% during the session. The total turnover dropped 34.2% from previous session to Tk3,28 crore.
Talking to Dhaka Tribune, market analysts and insiders said the share prices at the country’s stock market saw gain following news of some banks forming special fund, which might have had positive impact on investors' confidence.
The key index of DSE settled at 4008.05 after losing 279.32 points or 6.51% in Monday’s session, which was the highest single-day negative fall since the broad index was introduced seven years ago, amid news on coronavirus cases found in Bangladesh.
Three banks have confirmed forming special fund worth Tk200 crore each as part of central bank’s initiative to support the ailing capital market. The three banks are Sonali Bank, UCB Bank and Shahjalal Islami Bank Limited.
Meanwhile, several other banks might line up to form the special fund in the coming days, said DSE Managing Director Kazi Sanaul Hoq after meeting with MDs of listed banks on the day.
“After the sharp fall in the index, the market looks much cheaper in terms of market P/E ratio, which is around 10 or less than 10 at this stage," said Asif Ibrahim, chairman of the Chittagong Stock Exchange.
He said few banks started this process to get approval from their boards and the regulator, and were in the process of investing the fresh funds in capital market.
Bangladesh Bank on February 10 issued a circular, allowing scheduled banks to form a special fund of Tk200 crore each for investment in the capital market.
The fund can be drawn from the bank’s own resources or borrowing money from the central bank through Treasury bill or bond repurchase agreements or repos at a 5% interest rate.
These initiatives opened up an opportunity to bring a fresh investment of Tk12,000 crore from all 60 banks in the country, market operators said.
DSE Shariah-based index DSES gained 3.35% to end at 960.4 points, while blue-chip index, DS30, went up by 3.27% to close at 1,390.2 points.
The pharmaceuticals sector contributed 21.9% of the total turnover while engineering, textile and banking sectors contributed 14.4%, 11.6% and 7.3% respectively, showed the daily market analysis of UCB Capital Management Limited.
Square Pharmaceuticals secured the leadership position on the top turnover chart with Tk15.3 crore with its share price closing at Tk178.3 per share. Bangladesh National Insurance Company secured the highest gain of 10% during the session. Singer Bangladesh Ltd turned out to be the worst loser with its price declining by 7.5%.
Among the traded issues 323 gained, 15 declined and 18 remained unchanged during the session in Dhaka Stock Exchange while 180 gained, 49 declined and 14 remained unchanged in Chittagong Stock Exchange.
DSE currently has a market capitalization of Tk323,083 crore with the benchmark index, DSEX down by 6.66% since the beginning of this year.
The port city’s bourse, Chittagong Stock Exchange (CSE) also registered gain at the end of the session. The selected index, CSCX and all Share Price Index, CASPI increased by 211.2 and 342.9 points respectively.