Dhaka stocks plummeted on Wednesday with the key index hitting a 33 month low as panic-stricken investors continued selling shares as liquidity concerns were ignited amid the government’s move to divert state-owned corporations’ funds to the exchequer.
Country’s prime bourse broad index lost 75.79 points on the day. DSE plunged below the 5,000-point mark as panicked sale continued fearing further fall. On December 21, 2016, the index fell to 4,924.
At the end of the day, the index closed red at 4933.18 with 1.51% decrease from the previous day. All the large cap sectors showed negative movements. Food and Allied and Pharamaceuticals exhibited least negative movement with 0.46% loss. Fuel and Power exhibited highest negative movement with 3.27% loss. The share prices of energy sector dropped by 3.3%, textile 2.7 %, bank 1.6% and telecommunication 1.1%.
A total of 141,825 trades were executed in yesterday’s trading session generating a turnover of Tk 502 crore. At DSE, 37 securities gained price, 288 declined, and 28 remained unchanged.
The port city’s bourse, the Chittagong Stock Exchange, also ended lower with its All Shares Price Index (CAPSI) losing 213 points to close at 15,014 and the Selective Categories Index – CSCX – shedding 132 points to finish at 9,114.
Meanwhile, market turnover increased from last day’s session driven by selling pressure. At the end of the day turnover stood at Tk 502 crore which was 23% higher than last trading day.
Share prices of quality stocks such as Grameenphone, British American Tobacco Bangladesh, Square Pharma, United Power and Brac Bank have been falling. On the other hand, share prices of fundamentally weak and low cap companies such as Kay & Que, Monno Jute Stafflers, Stylecraft Limited, Northern Jute Manufacturing Co and ICB Islamic Bank Limited kept rising significantly.
One of the bigger market cap company UPGDCL’s value dropped by 4.6% while GP also fell 0.9% as tension between GP and BTRC took a new turn with GP announcing its legal battle against BTRC over the alleged audit claim, said UCB Capital Management on daily market commentary.
Though, the government decided to divert state-owned corporations’ funds worth Tk 2,12,100 crore last week to the exchequer despite the fact that the country’s financial sector has been suffering from liquidity crisis.
However, investors’ confidence got a battering, which triggered panic sell-off, amid depressed market outlook. Stock investors grappling with volatile financial market, risk-averse investors continued their selling spree on large-cap stocks and falling foreign portfolio investments continued selling their holdings.
The investors have been grappling with prolonged bearish trend at the market, liquidity crisis in the country’s financial sector, and Grameenphone’s tussle with the telecom regulator BTRC.
Insiders claim that the financial institutions were unwilling to invest in the market now as they feared the pressure on them. They also analyze that the banks’ asset quality was questionable and their operating cash flow was also very low, which ultimately would create more pressure on future liquidity.
They also blame that lapses in regulatory and enforcement matters led investors to continue their selling spree amid lack of confidence.
Money market also has a negative impact on the stock market. Lack of good company also causes continuous fall in the stock values.