The key indexes of the Dhaka and Chittagong stock exchanges rose yesterday despite the central bank unveiling a contractionary monetary policy a day earlier and scrapping the interest rate cap on loans.
The DSEX, the benchmark index of the Dhaka and Stock Exchange, rose 33 points, or 0.52 per cent, to 6,314.
The DS30, which represents blue-chip stocks, increased 0.24 per cent to 2,188 points while the DSES, an index comprised of shariah-compliant companies, edged up 0.47 per cent to 1,369 points.
Md Moniruzzaman, managing director of Prime Bank Securities, said the impact of the monetary policy would be little on the stock market as investors knew about the central bank move on the Six-months Moving Average Rate of Treasury bills (SMART), which will be used to fix the lending rate from the coming fiscal year.
The central bank rolled out the monetary statement policy for the first half of the next fiscal year, raising the rate at which cash-strapped banks take short-term loans by 50 basis points to 6.50 per cent.
The BB also increased the rate at which banks keep funds at the BB — known as the reverse repo—by 25 basis points to 4.50 per cent.
It also scrapped the 9 per cent interest rate ceiling on loans introduced in April of 2020.
The hike in the policy rate and the withdrawal of the cap is expected to elevate the borrowing costs for financial institutions, which will subsequently influence interest rates across the economy, said the central bank.
“This adjustment will make it more expensive for businesses and individuals to access funds for investments and consumption.”
The central bank will allow banks to add a maximum of 3 per cent. Currently, the interest rate of the six-month T-bill is 7.10 per cent. This means the interest rate on loans will be a maximum of 10.10 per cent.
“As the interest rate will go up by around 1 percentage point, it would not be a big deal,” said Moniruzzaman, adding that some listed companies that have kept funds with banks will benefit from the new interest rate setting.
Turnover, a key indicator of the DSE, surged 27 per cent to Tk 533 crore.
Of the securities traded, 146 advanced, 29 declined and 180 did not show any price movement.
Among the top gainers, the life insurance sector rose 4.9 per cent, the general insurance sector advanced 4.4 per cent and the cement sector increased 2.1 per cent. The jute sector shed 0.3 per cent.
Investors’ attention was mostly centred on the life insurance, pharmaceuticals and food sectors.
Meghna Insurance posted the highest gain with an increase of 9.97 per cent. Crystal Insurance, Progressive Life Insurance, Trust Islami Life Insurance, and Prime Islami Life Insurance were among the top gainers as well.
Khulna Printing & Packaging was the biggest loser, shedding 4.72 per cent.
Apex Tannery, Midland Bank, Khan Brothers PP Woven Bag Industries, and Metro Spinning were also on the list of significant losers.
Meghna Life Insurance was the most traded stock with issues worth Tk 28 crore transacted. Navana Pharmaceuticals, Sonali Life Insurance, Rupali Life Insurance, and City General Insurance also saw significant turnover.
The Caspi, the all-share price index of the Chittagong Stock Exchange, added 80 points, or 0.43 per cent, to close at 18,635 points.
Of the issues traded, 99 rose, 20 retreated and 99 did not see any price swing. Turnover of the port city bourse slipped 5 per cent to Tk 12.9 crore.