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Stocks slump, DSE turnover hits 20-month low

Analysts blame floor price system for the agony
Staff Correspondent
05 Dec 2022 00:00:00 | Update: 05 Dec 2022 12:05:47
Stocks slump, DSE turnover hits 20-month low

The turnover of the Dhaka Stock Exchange (DSE), the premier bourse of the country, dipped to a 20-month low on Sunday as most of the issues remained stuck at their floor prices, hammering investors’ confidence to put fresh funds in beaten-down scrips.

Besides, the alleged loan scams in the country’s banking sector published recently in the media cast a shadow over investors’ optimism, aided by the ongoing macroeconomic strains and apprehensions regarding the resurgence of political turbulence.

The DSE turnover stood at Tk 313 crore yesterday, the lowest since May 6, 2021.

The prime bourse’s turnover hit Tk 237 crore on May 5 last year.

Moreover, yesterday’s turnover was 35.3 per cent lower than the previous session’s tally of Tk 485 crore.

The market, according to analysts, was failing to lure new investors, while many of the existing investors were also pulling out their funds, forcing the market to hit poor turnover.

Besides, many investors who bought shares with margin loans were being forced to sell shares in face of pressure to repay their loans, they said, another reason to rattle the market.

Out of the 300 issues traded yesterday 214 stocks or 71 per cent were stuck at their floor prices, according to the DSE data.

Due to this ailing situation, many investors were trying to sell their shares to shun further losses but no buyers were seen to take a fresh stand towards these ailing issues anticipating bigger losses.

Market insiders and analysts blame the floor price system for the massive fall in the DSE turnover because many scrips even with the sound fundamental base were still not being traded due to their embracing of floor prices.

The DSEX, the benchmark index of the DSE, plunged 20.81 points or 0.33 per cent to settle at 6,224 yesterday against 6,245 points in the previous trading session.

Among other indices, the DS30, the blue-chip index DS30 shed 9.11 points or 0.41 per cent to close at 2,207, and the DSES, the Shariah-based index, fell 6.71 points or 0.48 per cent to finish at 1,363.

After a three-day rising trend, Dhaka stocks fell again as cautious investors chose to remain on the sidelines amid ongoing economic adversities and apprehensions regarding the resurgence of political movements, said EBL Securities, a stockbroker, in its daily market review.

The market remained choppy throughout the session since investors opted to protect their funds from the ailing market, it said adding that most of the scrips being disregarded at the floor price curbed liquidation opportunities in the market, making investors reluctant to inject fresh funds into equities.

The IT sector topped the turnover chart with a contribution of 19.8 per cent to the total DSE turnover, followed by the pharma & chemicals (14.6 per cent) and life insurance (9.7 per cent) sectors.

Most of the sectors displayed dismal returns at the premier bourse with the paper sector suffering the most with a loss of 4 per cent, followed by travel (2.6 per cent) and services (2.2 per cent), according to the EBL Securities.

On the other hand, the food sector rose slightly with a gain of 0.3 per cent, followed by financial institutions (0.2 per cent) and fuel & power (0.1 per cent).

Out of the 300 issues traded, 25 stocks advanced, 61 scrips declined, and 304 issues did not see any price movement on the DSE trading floor.

The port city bourse, Chittagong Stock Exchange (CSE), also closed lower with its two major indices – the selected indices (CSCX), and the all-share price index (CASPI), declining by 15.4 points and 25.4 points respectively.