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The securities regulator’s recent move to stimulate the country’s capital market backfired as Dhaka Stocks plunged massively on Monday along with extreme crisis of investors on the trading floor.
The turnover of the Dhaka Stock Exchange (DSE), the country’s prime bourse, fell below Tk 200 crore-mark, sounding an alarming bell regarding the market situation.
The DSE turnover yesterday fell to Tk 198 crore, the lowest in the last 30 months.
Before this, the DSE logged a turnover below Tk 200 crore-mark on July 7, 2020. The stock market regulator – the BSEC – last week had lifted the floor price restriction on 169 scrips, a move designed to give a boost to the ailing market.
But, investors were reacting to this regulatory move with anger as the turnover dipped alarmingly yesterday because of the lack of trading amidst the absence of investors at the premier bourse. With the latest move, the BSEC put a signal to bring an end to the regulatory intervention in the share price mechanism.
The lower price change limit for the certain 169 companies, as per the BSEC order, would be 1 per cent based on the reference price of the last trading day’s closing price.
An upper price change limit (circuit breaker), however, is still in place for them, according to the BSEC order.
Investors continued to exit as the majority of the stocks extended their losing streak even after the stock regulator withdrew the floor price restriction, because the regulatory action could not convince them about an optimistic market forecast, analysts say.
The DSEX, the benchmark index of the DSE, plunged 12.51 points or 0.20 per cent to 6,189 against 6,202 points in the previous trading session.
Among other indices, the DSES, the Shariah-based index, dropped 3.51 points or 0.25 per cent to 1,354, and the DS30, the blue-chip index, fell 3.50 points or 0.15 per cent to 2.191.
Dhaka stocks were facing extreme hurdles owing to the investors’ reaction to the floor price withdrawal amid the gloomy outlook of the market resulting from the prevailing adversities on the macroeconomic front, said EBL Securities, a stockbroker, in its daily market review.
Investors preferred to offload their holdings and remain on the sidelines since the dismal performance forecasts of the majority of the listed companies weakened their confidence to take long-term positions in equities, it added.
The recent regulatory measure curbed liquidity in the market as the current prices of those securities failed to woo bargain hunters who did not perceive those as lucrative investment opportunities, EBL Securities stated.
The pharma & chemicals sector topped the turnover chart with a contribution of 22.6 per cent to the total turnover, followed by the ceramic (14.6 per cent) and the IT (12.0 per cent).
Most of the sectors displayed dismal returns at the DSE with the travel sector suffering the most with a loss of 1.5 per cent, followed by services (1.4 per cent) and paper (1.2 per cent).
Out of the issues traded, 25 advanced, 137 declined, and 229 remained unchanged on the DSE trading floor.
The port city bourse, Chittagong Stock Exchange (CSE), also closed in red with its two major indices – the selected indices (CSCX), and the all share price index (CASPI) – advancing by 14.5 points and 23.6 points respectively.
