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DSEX, the key index of Dhaka Stock Exchange (DSE), fell 96.50 points or 1.52 per cent on Sunday, amid nervous general investors. It was the first trading session after withdrawal of floor price for all listed companies, except for 35 companies’ shares, after around 1.5 years.
Following five minutes of trading, the DSEX index plunged about 214 points but later recovered most of the initial losses. The key index finally went down by 96.50 points to settle at 6,240.
Meanwhile, market turnover also decreased by 7.6 per cent to Tk 588 crore as against Tk 637 crore posted in the previous session. Market insiders said the fall was very much expected as a large number of stocks failed to note price discovery for a long time due to the floor price.
They also said many investors did not get the opportunity to trade due to the prolonged price level. As a result, there was pressure to sell shares at the beginning of the day, but it gradually decreased.
Welcoming the floor withdrawal move, a leading stock broker said on condition of anonymity, “The market might see some correction in the first few days. There is nothing to be concerned about, as the market will recover very soon.”
On the matter, Chittagong Stock Exchange (CSE) Chairman Asif Ibrahim said, “I am optimistic that the investors will regain their confidence, and we will see a positive reflection in the indices of both the bourses.
“We collectively need to strengthen our capital market, as there are no viable alternatives for the long-term financing needs of our economy.”
The blue-chip index DS30 fell by 0.35 per cent to 2,137.19 points, and the Shariah-based index DSES declined by 1.02 per cent to close at 1374.16 points, respectively. All the large-cap sectors posted negative performances on the day.
In its daily market review, EBL Securities stated that the market went through intense volatility as most investors wanted to get rid of their holdings that got stuck on the floor for a long period, causing the broad index to start the session by losing more than 200 points.
However, bargain hunters came up and opted to bag some of the oversold scrips that led the indices to slightly recover the initial plunge, it said.
BRAC EPL, in its daily market review, mentioned that the NBFI sector experienced the highest loss of 7.56 per cent. Block trades contributed 5.2 per cent of the overall market turnover. BD Thai Aluminium Ltd was the most traded share with a turnover of Tk 24 crore.
Out of the 392 issues traded, 52 advanced, 293 declined, and 47 remained unchanged at the Dhaka bourse.
Port city bourse the Chittagong Stock Exchange (CSE) also settled on red terrain. The selected indices (CSCX) and All Share Price Index (CASPI) slumped by 283.5 and 476.9 points, respectively.
After the session's closing bell on Thursday, the stock market regulator, the Bangladesh Securities and Exchange Commission (BSEC), issued an order rescinding the floor price for all listed companies and mutual funds, except for 35 companies' shares, complying with a long-standing demand from stakeholders.
As per the new order, the upper limit and lower limit of the circuit breaker will be applicable for all securities other than 35 companies’ shares as per the previous order, which was issued on November 14, 2019.
On July 28, 2022, the BSEC imposed floor prices on all securities to prevent shares from falling beyond a certain level amid domestic and global macroeconomic strains.
The share prices of most companies have been stuck at their floor prices for an extended period, pushing investors towards liquidating their holdings and thus creating a liquidity crisis in the market.
Back in March 2020, the securities regulator took a similar move to limit the free-fall of shares following the global pandemic, when the DSEX fell below 3,000 points.
After its imposition, the floor price was a complete mess for the stock business, and a year of disappointment for the stock market followed as the average turnover and foreign investment reached rock bottom.
Such difficulties have never been encountered by investors since the collapse in 2010.
