A latest refinance scheme worth Tk 10.09 billion and raising the margin-loan ratio to 1:1 are the two major measures unveiled on the day to inject funds into the market that is bleeding dry, official and marker sources said.
Trade operators said stocks saw yet another major setback as jittery investors continued dumping their holdings to avoid further erosion of their portfolios in the ebb tide.
The market fell from the outset of the session as investors, particularly the retail ones, went for panic sales, pulling down the key index below 6,200-mark instantly at the opening.
Finally, DSEX, the core index of Dhaka Stock Exchange, slid 115.56 points or 1.84 per cent to settle at 6,142-the lowest in 11 months since June 29, 2021.
The DSEX has shed 556 points in the past eight consecutive sessions.
Two other indices also saw massive erosions. The DS30 index, comprising blue chips, slumped 39.51 points to finish at 2,277 and the DSE Shariah Index (DSES) shed 21.31 points to close at 1,361.
The market capitalisation also lost Tk 376 billion in just eight trading days and came down to Tk 5,031 billion on Sunday.
All the sectors faced selling pressure, leading to the share-price erosion of more than 91-percent stocks. Out of 379 issues traded, 345 declined, 21 advanced and 13 issues remained unchanged.
Market operators said multiple factors such as soaring inflation, devaluation of the local currency, record current-account deficit and rise in business cost together hurt investors' sentiment.
"The stock market has been in doldrums in the past few days amid rising inflation and depreciation of local currency. The news of proposed fuel-price hike might have made the investors nervous," says a merchant banker, seeking anonymity.
The inflation rate is rising quickly owing to global commodity market instability. Inflation, by official count, shot up to 6.29 per cent in April - the highest in 18 months - amid persistently rising food and non-food prices.
The energy regulator has proposed raising the bulk electricity price by nearly 58 per cent, which will have a negative impact on companies' profitability, he says.
The downturn was also fuelled by fears that the interest rate would be raised in an attempt to tackle the inflation, he adds.
Reza Hossain, an investor, says he has been losing money for the last few weeks and is now facing forced sale pressure from his broker as the prices of his stocks declined hugely.
"I am helpless," he told The Financial Express.
Like Reza, many investors are in a very tough situation as they are witnessing continuous erosion of their money every day.
"Now, some steps are needed on part of the regulators to lift investors' confidence," he suggests.
Meanwhile, the stock market regulator Sunday raised the margin- loan limit to 1:1 to prop up the bear market, with effect from today (Monday).
The securities regulator also suspended the 15-minute pre-opening session to avoid misuse of the feature.
"The jittery investors went on a heavy selloff to exit from the market. Some of the investors are stuck with heavy losses in their portfolios and cannot get out of it," says International Leasing Securities in an analysis of the stock-market situation.
Stocks nosedived amidst intense selling pressure, mirroring a meltdown in world equities, as investors braced for slowing global growth amid policy tightening by central banks, commented EBL Securities.
The country's stock market plummets as investors are concerned about rising commodity prices and the local currency losing value against the dollar, says the stockbroker.
Turnover, a crucial indicator of the market, stood at Tk 6.82 billion, 2.10- percent higher than the previous day's tally of Tk 6.68 billion.
Major sectors suffered big losses with general insurance losing 3.90 per cent, followed by cement with 2.40 per cent, financial institutions 2.10 per cent, food 1.70 per cent, power 1.50 per cent, banking 1.50 per cent and pharma 1.30 per cent.
Delta Life Insurance was the day's top gainer, posting a 5.60-percent gain, while First Security Islami Bank was the worst loser, losing 8.84 per cent following its price adjustment after record date.
The Chittagong Stock Exchange (CSE) also saw massive decline with the CSE All Share Price Index (CASPI) shedding 362 points to settle at 18,077 and its Selective Categories Index (CSCX) losing 217 to close at 10,847.
Of the issues traded, 242 declined, 17 advanced and 17 issues remained unchanged on the CSE trading floor.
The port-city bourse traded 7.23 million shares and mutual fund units with turnover value of Tk 170 million.
Meanwhile, the government is set to extend the tenure as well as amount of the capital-market refinancing fund to help revamp the country's ailing capital market, officials say.
"Both amount and tenure of the refinancing fund will be enhanced substantially to help the capital-market intermediaries along with small investors through injecting liquidity into the market," a senior government official familiar with the latest developments told the FE Sunday.
He said a notification is likely to be issued shortly in this connection.
Sources at the Ministry of Finance, however, say the amount of refinancing scheme may cross Tk 10 billion instead of Tk 8.56 billion.
The funds will be disbursed by the state-owned Investment Corporation of Bangladesh (ICB).
Earlier on May 02, 2019, the government extended the tenure of the capital-market refinancing scheme to December 31, 2022, from December 31, 2019, with some amendments to help stabilise the stock market.
As per the amendment, asset-management companies, merchant banks, stock dealers and stockbrokers have already been included in the list for receiving the funds.
On March 05, 2012, the government formed the scheme worth Tk 9.0 billion to protect the interest of small investors in the share markets that was scheduled to expire on December 31, 2019.
The scheme was announced as part of the government-set compensation package for the investors who had investment below Tk 1.0 million during the 2010-11 stock-market debacles.
Another report adds: The government has asked regulatory authorities concerned to help revamp the dwindling stock market that has been witnessing a freefall for the last eight trading sessions, officials said.
Finance Minister AHM Mustafa Kamal had a meeting with the central bank governor, finance secretary, and financial institution division (FID) secretary on Sunday to devise mechanisms for preventing further fall of the stock indices.
FID secretary Sheikh Mohammad Salim Ullah told the FE that due to the ongoing Russian-Ukraine war, there is an impact on the country's stock markets like other sectors.
The minister has asked the high officials to provide necessary support so that the investors' confidence can be restored on the market, he added.
The secretary said the minister also advised to keep the investments of banks through the Investment Corporation of Bangladesh (ICB) out of the purview of their exposure limit in the capital market.
The minister instructed to extend the tenure of the Tk 8.56 billion capital market refinance scheme from which further investments in the markets can be made immediately.
Sources, however, said both the amount and tenure of the refinancing fund will be enhanced substantially to help the capital market intermediaries along with small investors.
The size of the refinancing scheme may cross Tk 10 billion from the present Tk 8.56 billion, they said adding the fund will be disbursed by the ICB.
Earlier on May 02, 2019, the government extended the tenure of the capital market refinancing scheme to December 31, 2022, from December 31, 2019, with some amendments to help stabilise the stock market.
As per the amendment, asset management companies, merchant banks, stock dealers and stock brokers have already been included in the list for receiving the fund.
On March 05, 2012, the government formed the scheme worth Tk 9.0 billion to protect the interest of small investors in the share markets that was scheduled to expire on December 31, 2019.
The scheme was announced as part of the government-set compensation package for the investors who had investment below Tk 1.0 million during 2010-11 stock market debacles.
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