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Dhaka stocks edged higher amid seesawed throughout the session on Monday shrugging off the key policy rate raised by Bangladesh Bank to tame inflation.
The central bank on Sunday announced to increase in repo rate - the rate at which the central bank lends to commercial banks – to 5 per cent from a 4.75 per cent is the first since July 2020 as was widely expected.
Repo rate is the interest charged by the BB when banks borrow from them by selling their securities to the central bank. It is much like a bank charge its client interest for a car loan or home loan. Inflation rose 6.29 percent in April, the highest in 18 months.
Yet, the benchmark DSEX index rose more than 19 points or 0.30 per cent to settle at 6,388, extending its gaining streak for the third straight session.
Monday’s rally was particularly led by banks that remained under pressure for a long period due to rising bad loans. The banking stocks shined led by South Bangla Agriculture & Commercial Bank surging more than 9 per cent.
Riske-average investors booked some profits from earlier gains, making the market volatile.
Though the market ended in green terrain, late selling pressure weighed on the upward rally and wiped early gains, as investors saw every bounce back in the market as an opportunity to sell, dealers say.
However, the market breadth remained negative as out of 377 issues traded, 163 closed in green, 179 in red and 35 remained unchanged.
“Dhaka stocks slowed down, after witnessing short-lived rallies driven by regulatory support, as the rise of the policy rate made investors shaky on the trading board regarding decision making in capital market investments,” said the EBL Securities in a note.
Turnover stood at Tk 836 crore, slightly up from the previous sessions’ Tk 833 crore, backed by pharmaceuticals making up 15.5 per cent of the turnover.
The port city bourse, CSE, also settled in green terrain. The selected indices (CSCX) and All Share Price Index (CASPI) have advanced by 31.3 and 55.0 respectively.
