Higher risk, selling pressure push market down

The capital market witnessed a declining trend throughout last week due to higher market risk and selling pressure, says a private research agency.

In the week, market capitalisation reduced by 0.48 percent along with a 20.88 percent decline in trade and 26.84 percent in turnover.

According to Research and Innovation Lab (RIL), market risk and sell pressure of the investors were higher last week than the previous week.

The agency said some of the investors were in wait-and-see mood without engaging in trading activity.

They were keeping tab on potential market impact of the monetary policy of the central bank and media coverage on capital market.

Investors could not gain from their investment, it said.

Investors had to incur loss against per unit of risk level. The loss on investment was 1.68 unit against 1 unit of risk which was 8 times greater than the previous week.

As a result, the market performed ‘very poorly.’ The performance was worse in comparison to the previous week.

In the week, the broad index plunged by 1.81 percent, or 84.35 points, at 0.17 percent market risk. The advance-decline ratio (AD ratio) regressed from 1.03 to 0.99, which confirms the declining trend of the market.

Though the market moved bearish, multinational companies’ (MNC) market capitalisation rose to 34.23 percent from 33.77 percent.

Sector performance

P/E ratios of jute (129.05) and IT sector (106.73) were the highest among all the equities.

Despite having highest P/E ratio, investors suffered loss by investing in jute sector in the week (-0.89 percent).

In addition, IT sector generated 0.73 percent return which is insignificant for the investors.

As a result, RIL said, investors should be extremely cautious of investing in the securities of the respective sectors because it carries higher degree of risk with future loss potential of their investment.

In addition, the scenario also may indicate some intentional trading of the jute and IT sector shares.

This assumption of possible intentional trading is also validated by the poor P/E ratio of the bank, fuel and power and textile shares despite all of them having positive return for the investors.

Top scripts to observe

In the week, the top five stocks by return generation are EASTRNLUB (52.3%), DACCADYE (22.2%), ALLTEX (18.91%), CMCKAMAL (16.20%) and SAIHAMCOT (14.08%) and the worst five stocks by return generation are SEMLLECMF (-17.65%), SAPORTL (-12.93%), EMERALDOIL (-12.15%), KDSALT (-9.34%) and AMANFEED (-9.07%).

Top five stocks based on volatility and fluctuation in prices are EASTRNLUB (63.87), BATBC (55.74), NORTHERN (18.41), GEMINISEA (16.24) and MARICO (16.17).

The top five stocks by turnover (taka) are ALLTEX (3.39%), EMERALDOIL (3.22%), ITC (2.69%), SAIFPOWER (2.47%) and ALARABANK (2.35%). The top five stocks by turnover (Volume) are UNITEDAIR (5.81%), ALARABANK (4.56%), CNATEX (3.34%), ALLTEX (2.31%), and DACCADYE (2.97%).

The top stocks by market capitalisation are GP (10.83%), BATBC (5.41%), SQUARPHARMA (4.44%), LAFSURCEML (2.69%) and RENATA (1.70%).

Some companies such as EMERALDOIL (21281) traded in a high volume and number despite having no disclosed price sensitive information related to the companies.

Investors should be cautious on these stocks, RIL said.

Other stocks leading the pool in terms of number of trade were ITC (20897), UPGDC (16459), REGENTEX (15976), ALLTEX (15451).

How the market may behave next week

RIL said the market may remain volatile to a great extent next week for which investors must be cautious before making any decision.

The fluctuation in indices next week may remain more or less the same as last week and profit booking may not be very easy for the investors.

The agency said investors can be hopeful as there is high possibility that the severe bearish trend of the last week may find a resistance next week.

Finally, investors should focus more on protecting their investment putting extra attention on the risk rather than making high return next week.