Stocks suffered a big fall Tuesday, with prime index of Dhaka Stock Exchange (DSE) dipping below 5,500-mark after more than nine months, amid persistent liquidity problem in the money market.
Market operators said investors' confidence remains low to the market as persistent liquidity shortage coupled with uncertainty continuing over the Dhaka bourse's share sales to strategic partner.
"The prevailing liquidity problem in the banking sector continued to push banks' deposit interest rate high and lure many investors to put money in banks instead of investing in capital market, which was taking a toll on the market," a merchant banker told the FE preferring anonymity.
Since beginning of the year, indexes have been on the downward direction, with some periodic upward movement, which failed to sustain. During the fall, index lost about 845 points or 15 per cent from the peak since November 26 last year.
The market started the day on downward movement which continued till end of the session with no sign of reversal, finally the core index of the major bourse eroded more than 78 points.
DSEX, the benchmark index of the DSE, went down by 78.39 points or 1.41 per cent to settle at more than nine months low at 5,491. It was the lowest level of DSEX since June 19, 2017.
According to International Leasing Securities, the prime index of the premier bourse witnessed a sharp decline amid panic-driven sell offs.
"The panicked investors liquidated their position from almost all the sectors, especially textile, financial institution, bank, fuel & power, engineering, pharmaceutical and food sectors which led the index to fall below 5,500 points," the stockbroker said.
The two other indices of the premier bourse also saw sharp fall. The DS30 index, comprising blue chips, fell 18.60 points to finish at 2,056 and DSES (Shariah) index plunged 16.42 points to settle at 1,303.
However, turnover increased as the total turnover on the major bourse amounted to Tk 3.11 billion, 39 per cent higher than the previous day's turnover of Tk 2.24 billion.
"Investors' sentiment regarding the market is still shaky due to the ongoing liquidity crisis," commented EBL Securities, a stockbroker, in its regular market analysis.
All the large-cap sectors showed negative performance. The non-bank financial institutions witnessed the highest loss of 2.36 per cent, followed by banking 1.78 per cent, power 1.39 per cent and engineering 1.28 per cent.
"The market fell sharply as a section of investors went on panic sale, prompting them other investors to go for disposing of shares," Mostaque Ahmed Sadeque, president of DSE Brokers Association of Bangladesh, told the FE.
Mr. Sadeque said the investors went on the selling binge fearing further fall of stock prices as the central bank is yet to clear the finance ministry's recommendations.
Identifying liquidity shortage as the key reason for the market's freefall, the market operators recently sent a set of proposals to the ministry of finance including revision of exposure limit to help revive the capital market which MoF forwarded to the central bank for special consideration.
Considering the present market situation, Mr. Sadeque urged the central bank to ensure immediate implementation of the recommendations made by the Ministry of Finance to revive the moribund stock market.
Port city bourse CSE ended lower with the CSE All Share Price Index - CASPI - slumping by 230 points to settle at 16,946 points and Selective Categories Index - CSCX - shedding 137 points to finish at 10,238 points.
Here too, the losers beat the gainers as 190 issues closed lower, 29 ended higher and 8 remained unchanged.
The port city bourse traded 5.50 million shares and mutual fund units worth more than Tk 123 million.
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