Stock index near 6,000: Does it sustain the growth?
The stock market index is hovering around 6,000 points now, raising questions among investors over whether it would remain stable here or have a plunge like before.
The DSEX, the Dhaka Inventory Exchange's (DSE) prime index, went past 5,900 points four times since its inception in 2013.
Analysts are saying that this year there was a huge possibility for it never to roll back because self-assurance was first prevailing among many persons alongside a more affordable interest rate in the banking sector.
The sustainability of the index around the 6,000 points level is determined by many things, said Mokta Rani Sarker, assistant professor of the Section of Financing at Jagannath University.
If the recent surge of the index happened for fundamental causes, it'll sustain but any artificial rise can't be sustained, she said.
On the positive side, investor confidence that you can buy returned while less interest rate in banking institutions pushed investors over here, she said.
"But our marketplace size is tiny, so it is vunerable to dangers of manipulation, although some steps have already been taken recently," Sarker added.
"Our technical analysis implies that the market has a opportunity to cross the 6,000 things level and store that advancement," explained Ali Xahangir, CEO of amarstock.com, a share market-based data provider.
The marketplace was sluggish for days gone by seven or eight years and now the index reaches its closest to the 6,000 points level, where many stocks remain undervalued, he said.
Especially, stocks of banking institutions and non-banking finance institutions possess remained stagnant at the same place because they had been before the rally, he added.
Meanwhile, the marketplace normally remains buoyant found in a few months when the country's gross annual budget is announced in the trust of incentives, he added.
Despite the pandemic, the currency markets index and turnover had remained high this season which indicates that persons are investing here with a lot of confidence, explained Sharif Anwar Hossain, president of DSE Brokers' Association.
Normally the market remains sluggish through the month of Ramadan but this season was an exception, he said.
Due to the upsurge in confidence for the presence of a fresh regulatory commission, lower interest rate in banks and small scope for investment found in other instruments, the currency markets has been undergoing a rising pattern, said the association leader.
If the index crosses the 6,000 items level, funds will be mobilised in much larger quantities, all of which are now stuck, he said.
"However, the index rose mainly through insurance and some stocks getting gambled with but many fundamental stocks remain lucrative," he said.
"So, I hope this year the index will remain above the 6,000 mark," added Hossain, also managing director of Md Sahidullah Securities.
M Sayadur Rahman, president of Bangladesh Merchant Bankers' Association, believes the marketplace would head out beyond the best it has ever been.
The index had reached the best 6,336 points on November 26 of 2017, shows the DSE data.
"There are many reasons for the trust," he said, adding that this year fixed deposit rates at banks were very low, less than the inflation rate, for which the stock market was more preferable to the people.
Listed banks provided bigger dividends for 2020, spending the dividend yield above 5 per cent on an average, he said, adding, "Additionally it is attracting investors."
Corporate tax can also be lowered subsequent fiscal year, meaning all of the indicators are confident for the market, said Rahman.
The new regulatory commission has adopted many reformative steps too, that will keep positive impacts on the index, he added.
