Dhaka stocks fall due to price correction

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FE Report
Dhaka stocks fell Sunday led by banks, pharmaceuticals, energy and power issues snapping a two-day gaining streak due mainly to price correction.
Analysts and market operators attributed fall of stock prices on the Dhaka Stock Exchange (DSE) to price correction.
The rumour on not to disburse loan at the rate of 1:1 by the merchant banks has also slightly affected the market, according to market operators.
Meanwhile, stock prices of the insurance companies continued to rise abnormally on the rumour that the paid-up capitals of the companies will be raised.
Share prices of Paramount Insurance, Mercantile Insurance, Asia Pacific Insurance, Global Insurance, City General Insurance and Purabi General Insurance whooped 20.00 per cent, 19.79 per cent, 19.43 per cent, 18.86 per cent, 18.60 insurance and 18.59 per cent respectively.
Some 12 insurance companies recorded over 15 per cent rise on the day.
The indices -- benchmark the DSE General Index (DGEN), the All Shares Price Index (DSI) and the DSE-20 Index (DS20) -- shed 24.78 points, 20.73 points and 27.06 points to close at 2975.38, 2502.35 and 2353.70 respectively.
The trading, however, started on cheerful note as the main index climbed 17 points in the first one and half hour of the trade on the expectation that the market might rise as the newly approved 'loan disbursement ratio' became effective from Sunday but their expectation was not fulfilled as they were not allowed to get loan at the rate of 1:1.
As a result the indices extended losses towards closing of the trade.
Commenting on the market, Yaweer Sayeed, a capital market analyst, said the market showed maturity Sunday. He ascribed the market downturn to the price correction saying investors have sold their securities booking profit.
Sayeed said the rumour over loan issue might leave slightly negative impact on the market.
The rumour that the Securities and Exchange Commission (SEC) directed the merchant banks not to raise loan margin to 1:1 from 1: 0.5 also caused the market to fall.
But the SEC ruled out such rumour. "Such kind of direction was not given to the merchant banks and as per the commission order the merchant bankers can disburse loan to their clients 1:1 from Sunday," said Farhad Ahmad, the executive director of the regulatory body.
"Reluctance by the merchant banks to provide loan to their clients is their internal matter," he said.