Stocks returned to positive territory this week as renewed buying interest in selected sectors helped the benchmark index recover, although persistent domestic and geopolitical uncertainties kept investors cautious.
The market opened the week under selling pressure as investors booked profits following recent gains. Selective buying, however, emerged in small-cap and momentum-driven stocks as investors remained uncertain about the market's near-term direction.
Market sentiment improved in the middle of the week amid optimism that the Bangladesh Securities and Exchange Commission (BSEC) might relax its margin loan rules. The expectation triggered broad-based buying, briefly lifting the benchmark index above the 5,900-point mark.
However, the buying momentum failed to sustain in the final trading sessions as investors moved to realise profits. Concerns over the proposed regulatory changes, the ongoing energy crisis and broader macroeconomic and geopolitical uncertainties once again weighed on market sentiment.
A leading stockbroker said investors remained cautious due to several domestic and external factors, including concerns over disruptions to gas supplies and lingering geopolitical tensions in the Middle East.
"These concerns prompted many investors to stay on the sidelines, limiting the strength of the market's recovery," he added.
Of the five trading sessions during the week, three ended lower and two closed higher. Despite the mixed trend, the benchmark index of the Dhaka Stock Exchange (DSE) gained nearly 23 points, or 0.39 per cent, to close at 5,884, recovering from a 34-point loss in the previous week.
According to EBL Securities, the benchmark index returned to positive territory as renewed buying interest emerged across sectors, although persistent domestic and geopolitical uncertainties kept overall market sentiment subdued.
Sheltech Brokerage, in its weekly market analysis, said the market was primarily influenced by optimism surrounding potentially more flexible margin financing regulations.
The market initially faced selling pressure, but buying interest strengthened in the middle of the week following media reports suggesting that the margin lending regulations could be amended to provide greater flexibility, the brokerage said.
The buying momentum, however, failed to continue towards the end of the week as investors resorted to profit-taking amid renewed caution over the proposed margin lending rule amendments and the prevailing energy crisis.
The DS30 Index, which tracks the country's blue-chip stocks, edged up 0.90 point to 2,193, while the Shariah-based DSES Index declined nearly four points to 1,177.
Price gains in a number of large-cap stocks, including BRAC Bank, Pubali Bank, Sharp Industries, British American Tobacco Bangladesh and Beximco Pharmaceuticals, contributed nearly 17 points to the weekly rise in the benchmark index.
The gains were, however, largely offset by price declines in Square Pharmaceuticals, Grameenphone, City Bank and Bangladesh Steel Re-Rolling Mills.
Moreover, there is also a cause for concern, as 'Z' category stocks continued to dominate the top 10 weekly gainers' chart, indicating potential market manipulation.
Six junk stocks - Tung Hai Knitting, GBB Power, Nurani Dyeing, NRBC Bank, Metro Spinning Mills and C&A Textile -- were among weeks' top 10 gainers, soaring between 52.8 per cent and 15.6 per cent this week.
Trading activity weakened despite the market having five trading sessions during the week, compared with four in the previous week. Total turnover on the DSE stood at Tk 49.88 billion during the week, compared with Tk 47.27 billion in the previous week.
Consequently, average daily turnover fell nearly 16 per cent to Tk 9.97 billion from Tk 11.82 billion in the week before.
The decline in average turnover indicated that investors remained selective and preferred to stay cautious amid uncertainties surrounding the market outlook.
The textile sector accounted for the largest share of the week's total turnover at 22.1 per cent, followed by general insurance at 18.3 percent and pharmaceuticals at 8.5 per cent.
Market breadth remained negative, with 208 issues declining against 162 advancing, while 17 remained unchanged on the prime bourse.
Beximco emerged as the most-traded stock of the week, with shares worth Tk 1.83 billion changing hands. Sharp Industries, Malek Spinning, Saiham Textile and ML Dyeing followed in terms of turnover.
Major sectors delivered mixed performances during the week. Food, telecommunications and banking stocks posted gains, while pharmaceuticals, power and engineering sectors came under correction.
The Chittagong Stock Exchange (CSE) also ended the week higher. Its All Share Price Index (CASPI) gained 78 points to close at 15,803, while the Selective Categories Index (CSCX) rose 47 points to 9,627.
