The broad index DSEX of the Dhaka Stock Exchange (DSE) dipped 1.43 per cent or 88.01 points to close at 6,039 points on Wednesday.
It was the largest single-day fall since February 2 last year, when the DSEX plunged by 1.97 per cent or 108 points.
Merchant bankers and stock brokers alleged that a 'political rumour' spread by vested quarters created panic among the investors, prompting them to go for disposing of their stocks.
"It's simply a rumour," DSE Brokers Association Mostaque Ahmed Sadeque told a hurriedly called press briefing, following the setback.
The market operators, however, declined to explain what prompted such a speculation. They only said the market would bounce back after some days.
Dr AB Mirza Azizul Islam, former adviser to the caretaker government, however, said the general investors might have been panicked unnecessarily ahead of the verdict in the Zia Orphanage Trust corruption case scheduled for February 8.
Bangladesh Merchant Bankers Association (BMBA) told the press briefing that the market would rebound after some days.
"There is no valid reason for the fall. It happened mainly because of a political rumour," BMBA secretary general Khairul Bashar Abu Taher Mohammad said.
DSE Brokers Association president Sadeque alleged that a vested quarter spread the rumour that the market would continue to fall.
He said the central bank has decided to reduce the ADR (Advance-Deposit Ratio) to 83.5 per cent from 85 per cent by June. But the banks said they would not be able to lower the ADR by June and the central bank accepted it.
"So, there is no relation between the plan to cut the ADR and the market fall," said Mr Sadeque. "Moreover, the central bank laid emphasis on the dependence on the capital market instead of banks for the long term financing."
He also pointed out that there were no aggressive sales in the foreign portfolios on the day. Moreover, the foreigners purchased substantial quantity of shares last year.
"A political rumour is being spread from a certain quarter," Sadeque said.
BMBA first vice president Mohammed Ahsan Ullah termed the monetary policy as capital market-friendly. "The banks' exposures are presently within the stipulated limit. So, there is no relation between the decisions of the central bank and the sudden market fall," he said.
BMBA vice president Md. Rafiqul Islam, among others, was also present at the press briefing.
When contacted, Mr Mirza Azizul Islam said: "Overall, the monetary policy statement is expansionary in nature and investors should not be worried."
There is no possibility of squeezing the money supply due to the plan to cut the ADR (advance-deposit ratio) by Bangladesh Bank, he said. "There is no valid justification for the Wednesday's drastic price fall of shares."
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