Last week's stock price correction reversed in a single day

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FE Report
The Securities and Exchange Commission (SEC) Monday indicated that it might resort to tough actions against 'irrational' development in the stock market.
The SEC warning came immediately after a record gain in stock prices in a single day following a partial reversal of its decision on credit facilities to retail investors by the merchant banks.
"All our previous measures were soft, but this time we will take a hard line, if irrational behaviour does not stop," a senior executive of SEC told the FE.
The benchmark DGEN index Monday gained a record 127 points to close at 3071.436. The turnover also jumped to Tk 2.209 billion from its previous trading day's Tk 1.512 billion. Actually, the correction in stock prices that took place for the last few days because of the restriction on lending by merchant banks was compensated for on Sunday. Two other indices-All Shares Price Index (DSI) and DSE-20 Index (DS20) - also crossed all previous records.
The SEC official said the commission has many tools under its command for maintaining stability in the market and, whenever necessary, it would not hesitate to apply those.
Market operators said the partial lifting of the restriction on disbursement of loan by the merchant banks has rekindled enthusiasm among the investors.
The SEC on November 19 last had asked the merchant banks and brokerage houses to stop lending to retail investors, apparently, to rein in the soaring prices of stocks. The restriction led to continuous fall in stock prices for four consecutive trading days last week. A small group of investors staged demonstration in front of the SEC building protesting the SEC decision.
However, following a meeting attended by its officials and representatives of merchant banks Sunday last, the SEC decided to only allow merchant banks to provide loans to retail investors at an equity ratio of 1: 0.05. The ratio was 1:1 earlier.
Market operators said the rally in the prices of listed issues belonging to banking and insurance sectors propelled the indices to a new high.
"The investors remained dependent on banks and insurance as those issues provide better yields," said the chief executive officer (CEO) of a brokerage house.
On the day, DSE General Index (DGEN), All Shares Price Index (DSI) and DSE-20 Index (DS20) index gained 127.040 points, 105.423 points and 77.118 points to close at 3071.436, 2596.870 and 2398.741 respectively.
The total turnover jumped to Tk 2.209 billion from its previous Tk 1.512 billion. The total market capitalisation also jumped to Tk 757.070 billion from its previous Tk 731.325 billion.
Out of 222 traded issues, prices of 176 gained, 26 declined and 20 remained unchanged.
BRAC Bank was the turnover leader with shares changing hands worth Tk 164.874 million followed by UCBL Tk 162.671 million, Power Grid Tk 142.045 million, IBBL Bond Tk 141.238 million, Lafarge Surma Cement Tk 88.811 million, Trust Bank Tk 74.210 million, Social Investment Bank Tk 74.073 million, Lanka Bangla Finance Tk 68.835 million, Uttara Bank Tk 68.564 million and Summit Power Tk 57.615 million.
BRAC Bank gained 4.77 per cent to Tk 1625.00, UCBL 8.56 per cent to Tk 5701.50, Power Grid 7.28 per cent to Tk 725.50, IBBL Bond 23.87 per cent to Tk 1752.25, Lafarge Surma Cement 1.30 per cent to Tk 524.00, Trust Bank 5.00 per cent to Tk 1017.50, Social Investment Bank 7.71 per cent to Tk 554.75, Lanka Bangla Finance 8.22 per cent to Tk 104.00, Uttara Bank 8.26 per cent to Tk 4906.75 and Summit Power 3.22 per cent to Tk 1505.25.
Besides the top 10 turnover leaders, share prices of BGIC, BOC, Eastern Lubricant, ICB AMCL First Mutual Fund, ICB Islamic Mutual Fund, Karnaphuli Insurance, Pragati Life Insurance, Nitol Life Insurance and Progressive Life Insurance increased by more than 10 per cent on the day.