The turnover on Tuesday of Tk1,088.19 crore was over 20% higher than Monday’s figure and was the biggest for a single day since November 21, 2017, when it exceeded Tk1,091 crore
The Dhaka Stock Exchange (DSE) recorded its highest daily turnover in eight months on Tuesday, mainly due to a decision by banks to lower their interest rates.
The turnover on Tuesday of Tk1,088.19 crore was over 20% higher than Monday’s figure and was the biggest for a single day since November 21, 2017, when it exceeded Tk1,091 crore.
The strong performance was driven by the engineering and textile sectors, which contributed 23.1% and 20.6% of the total turnover respectively.
The turnover chart for companies was topped by the newly-listed Bashundhara Paper Mills with 2.77 million shares worth Tk45.8 crore.
Tuesday’s trading marks the latest recovery point for the DSE following its bearish start to the year when investor confidence eroded and the market suffered its biggest single day drop in over four years on February 4.
It shed 2.2% of its value - or 133 points - as DSEX, the key index of DSE, slid down to 5,888.3 points and the daily turnover at the premier bourse stood at a paltry Tk360 crore.
Analysts said the market was suffering from a liquidity crisis caused by a Bangladesh Bank regulatory measure to rein in aggressive loan disbursement of bank loans.
In response to the slump, the Bangladesh Association of Banks (BAB), a platform of private commercial banks’ owners, decided to lower rates on June 20.
It brought down the interest rate on lending to 9% and the rate on deposits to 6%, effective from July 1.
At the same time, investor confidence has been boosted by the recent deal which made a Chinese consortium a strategic partner of the DSE.
“For the past couple of trading sessions, there were optimistic sentiment and positive expectation among the opportunist investors,” International Leasing Securities Limited said in their market analysis.
“That is why they continued to inject fresh funds into the market anticipating optimistic year-end earnings and dividend declaration.”
DSE former president Shakil Rizvi said there had been fewer investments from investors because of the end of the fiscal year in June.
“Things have now picked up again,” he said. “People, especially pensioners, tend to withdraw their money from banks and invest in the stock market when the deposit rate is cut.”
Brac EPL Stock Brokerage Chief Executive Officer Sherief M A Rahman said retail investors had played an important role in the higher turnover.
“They are very active on the trading floor due to stability in recent weeks which restored their confidence,” he said.
“The banks’ move to cut deposit rates attracted investors to pour in new funds.”