Stocks rise steeply as floor price is back

Dhaka stocks gained sharply on Sunday as investors reacted positively to the floor price reintroduced by the securities regulator.

The market jumped as soon as trade began in the morning as the benchmark DSEX index rose more than 100 points in the first hour of trading. At the end of the day, it was up 153 points or 2.56 per cent to settle at 6,134, rebounding from the 15-month low seen in the previous session.

Two other indices also closed sharply higher. The blue-chip index DS30 rose 48.32 points to 2,193 while the DSES Index, which represents Shariah-based companies, soared 31.27 points to 1,339.

“The equity indices of Dhaka bourse have returned to green territory as the market regulator reinstated the floor price mechanism, curbing the majority of sell-offs by panic-stricken investors, in order to restore the ailing market,” said the EBL Securities in a note. 

The market skyrocketed as investors rushed to pour fresh funds, taking advantage of the floor price, as a result, the first hour of the trading session witnessed an upsurge of 100 points, it said.

However, the floor price is expected to curb the market turnover in the coming sessions as it might hinder the opportunity for prompt liquidation of the securities.

On Thursday, Bangladesh Securities and Exchange Commission had reintroduced floor price to prevent a continuous downward spiral of stock prices, which went into effect on Sunday.

As the indices went into freefall, the regulator intervened by issuing the new temporary norms to curb the market volatility. The regulator reintroduced the floor price under which the average closing prices of any listed security over the preceding five days would be set as its floor price. If prices drop below the five-day average, it would automatically trigger a circuit breaker for an individual stock.

Meanwhile, the Dhaka bourse observed a moderate increase in participation as the total turnover increased by 28.6 per cent and stood at TK 568 crore as against Tk 442 crore in the previous session.

Beximco was the most traded stock, followed by KDS Accessories, Matin Spinning Mills, Orion Infusion and Intraco Refueling Station.

On the sectoral front, textile (21.8 per cent) issues exerted the highest turnover followed by general insurance (10.6 per cent) and pharma (9.7 per cent) stocks. All of the sectors displayed positive returns, out of which general insurance (8.8 per cent), paper (4.8 per cent) and life insurance (4 per cent) exerted the highest returns on the bourse.

Out of the 386 issues traded, 362 advanced, 7 declined, and 17 remained unchanged.

The Chittagong Stock Exchange (CSE) also ended sharply higher with the CSE All Share Price Index (CASPI), soaring 379 points to settle at 17,976 and its Selective Categories Index (CSCX) rising 227 points to close at 10,770.