The prime index of the Dhaka Stock Exchange (DSE) dipped below the 5,700-mark on Tuesday after two weeks as investors preferred to book profits while opting for initial public offers.
DSEX, the key index of the DSE, fell by 1.63 per cent or 94.55 points to settle at 5,695. DSEX lost roughly 140 points in the past three consecutive sessions. DSE market-cap wipe-out Tk 233 billion in eight trading days after hitting an all-time high of Tk 5,017 billion on January 14.
The key index of the prime bourse, however, added 1,045 points in the past one and a half months, as investors kept confidence in regulatory steps to bring discipline in the market and were encouraged by expected than faster economic recovery.
Market analysts said lower than expected earnings declarations of some companies during the trading hour on Tuesday coupled with IPO subscription of some big companies contributed to the index fall.
Many investors freed some funds to participate in the initial public offerings, said a merchant banker.
IPO subscription of Lub-rref (Bangladesh) opened on Tuesday while the subscription of three more companies - NRBC Bank, Desh General Insurance and Index Agro Industries -will open next month.
Top negative index contributors of the market were Robi Axiata, Beximco, ICB, Beximco Pharma and Grameenphone, according to data from amarstock.com, a stock market data portal.
Brokerage International Leasing Securities said profit booking on large-cap stocks that have seen price surge in the last few weeks contributed to the fall in indices.
The stockbroker noted that soon to be implemented interest rate cap on the margin loans may induce investors into going for sell-offs as many of the brokerages are reluctant to offer credit at such a lower rate.
Many merchant banks insisted on adjusting margin loans ratio as they are unable to provide credit at such a low rate due to their high borrowing costs, while the highest spread allowed at only 3.0 per cent, commented EBL Securities.
The stock market regulator has recently fixed the highest interest rate at 12 per cent on margin loans disbursed against listed securities with the highest spread on the cost of credit at 3.0 per cent.
Turnover, a crucial indicator of the market, also plummeted to Tk 11.25 billion on the country's premier bourse, slumping by 29 per cent over the previous day's mark of Tk 15.85 billion.
Losers took a strong lead over the gainers, as out of 357 issues traded, 255 declined, 27 advanced and 75 remained unchanged on the DSE trading floor.
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