Eased margin loan facility pulls stocks up for 2nd day

Dhaka stocks rose sharply on Tuesday, extending the gaining streak for the second straight session as the regulatory decision to ease margin loans cheered investors on the bourse.

The benchmark DSEX index of the Dhaka Stock Exchange (DSE) went up 73.41 points or 1.10 per cent to end the day at 6,742 points.

Two other indices were also in green as the DSES Shariah index gained 13.83 points or 0.97 per cent to settle at 1,431 and the blue-chip comprising DS30 index advanced 19.70 points or 0.78 per cent to 2,523. At the same pace, the DSE turnover advanced 17.11 per cent to Tk 872 crore, which was Tk 745 crore in the previous session.

“Amidst the recent volatility, the regulatory move to relax margin loans has saved investors from a panic-driven capital market,” said a stock broker.

Investors remained focused on sector-specific issues and pursued opportunities to rebalance portfolios in the recent upward rally of the capital market, said EBL Securities in its daily market commentary.

The market observed a strong recovery attempt in the past two trading sessions as the recent margin loan directive made investors buoyant on the bourse, it said.

The majority of the stocks closed in green territory. Out of the 378 issues traded, 286 advanced, 69 declined, and 23 remained unchanged.

All the large-cap sectors posted positive performance on the day. NBFI booked the highest gain of 1.71 per cent, followed by engineering 1.57 per cent, food and allied 1.57 per cent, bank 1.49 per cent respectively.

Block trades contributed 0.7 per cent of the overall market turnover. Bangladesh Export Import Company Limited was the most traded share with a turnover of Tk 71 crore.

On Sunday, the Bangladesh Securities and Exchange Commission (BSEC) relaxed the margin loan norms aiming at increasing greater fund flow to the cash-starved stock market.

The move enabled lenders to provide margin loans to their clients against any listed companies except the junk ones soon after the companies’ changing categorisation.

However, in case of ‘Z’ category companies, they can provide margin loans after seven trading days from the date of categorisation.

In 2015, the BSEC barred merchant bankers and brokers from giving margin loans against any category-changing companies or securities in the first 30 trading days.

The margin rules will remain the same for the new companies listed with the stock exchanges, which means no margin loans can be provided against the companies and securities in the first 30 trading days from the date of their listings. On November 15, the BSEC scrapped index-based margin loan facilities and allowed stockbrokers and merchant banks to provide a maximum of 80 per cent of investors’ deposits as margin loans.

Meanwhile, the port city bourse, Chittagong Stock Exchange, also settled in green terrain on Tuesday. The Selective Category Index (CSCX) and All Share Price Index (CASPI) advanced by 131.7 points and 218.0 points respectively on the day.