Core index jumps 153 points as BSEC sets floor price

Stocks rebounded strongly in a gaining streak Sunday, with all three indices of the prime bourse rising more than 2.0 per cent each, as the securities regulator reintroduced the 'floor price' on all securities.
Continuous fall of share prices forced the Bangladesh Securities and Exchange Commission (BSEC) Thursday to impose 'floor price' to stop further fall.
Following the regulatory intervention, the market saw steep rise at opening and the key index jumped more than 100 points after the first hour of trading, as prices of some 300 companies rose automatically due to adjustment of floor price.
DSEX, the prime index of the Dhaka Stock Exchange (DSE), soared 153.45 points or 2.56 per cent to 6,134, after hitting a 14-month low in the previous session.
Earlier, the market index shed 386 points while the market-cap wiped out Tk 267 billion in just 13 trading days after the Eid vacation.
Market operators said the regulatory intervention halted the market fall as the stock market regulator reintroduced floor price on all securities.
The bargain hunters came up to buy some stocks at a lucrative price after the recent steep correction, said a merchant banker.
However, some market analysts opposed frequent intervention from the regulator.
"The imposition of floor price may stop the index from sliding in the short run, but it will slow the movement of the market in the long run," said an asset manager, requesting anonymity.
The commission was compelled to impose 'floor price' to protect the general investors as they became panicked, Prof Shibli Rubaiyat Ul Islam said at a function held at the Capital Market Journalists' Forum (CMJF) Sunday.
"We do not want to intervene in index movement by imposing floor price. But the commission imposed the floor price as the investors are continuously losing money," said Mr Islam, responding to a query.
Stocks returned in gaining streak as the market regulator reinstated the floor price mechanism, curbing the majority of sell-offs by panic-stricken investors, in order to restore the ailing market, said EBL Securities.
"The market skyrocketed as investors rushed to pour fresh funds, taking advantage of the floor price, as a result, the first hour of the trading session witnessed an upsurge of 100 points," said the stockbroker.
However, the floor price is expected to curb the market turnover in the coming sessions as it might hinder the opportunity for prompt liquidation of the securities, said the stockbroker.
International Leasing Securities said the bargain hunters showed their buying interest in sector-wise issues by putting some confidence on the regulator.
Two other indices also closed sharply higher. The DS30 Index, which consists of the blue-chip companies, rose 48.32 points to 2,193 while the DSES Index, which represents Shariah-based companies, soared 31.27 points to 1,339.
Turnover, another important indicator of the market, stood at Tk 5.68 billion, which was Tk 4.42 billion in the previous sessions.
The investors' activities were mostly focused on the textile sector, capturing 22 per cent of the day's total turnover, followed by general insurance (11 per cent) and pharmaceuticals (10 per cent).
All the sectors saw price appreciation with general insurance generating the highest gain of 8.8 per cent as 53 insurers out of 54 ended higher.
It was followed by cement gaining 3.90 per cent, financial institutions 3.10 per cent, food 2.90 per cent, power 2.40 per cent, textile 3.50 per cent, telecom 3.0 per cent and banking 1.50 per cent.
Prices of almost 95 per cent traded issues closed higher, as out of 382 issues traded, 362 closed higher, seven lower and 13 issues remained unchanged on the DSE trading floor.
Beximco was the most traded stock with shares worth Tk 298 million changing hands, closely followed by KDS Accessories, Matin Spinning Mills, Orion Infusion and Intraco Refueling Station.
Insurance sector dominated the day's gainers' chart as eight out of top 10 gainers were insurance companies.
Union Insurance Company was the day's top gainer, soaring 11.76 per cent following its floor price adjustment while United Insurance Company was the day's worst loser, losing 2.92 per cent.
The Chittagong Stock Exchange (CSE) also ended sharply higher with the CSE All Share Price Index (CASPI), soaring 379 points to settle at 17,976 and its Selective Categories Index (CSCX) rising 227 points to close at 10,770.
Of the issues traded, 267 advanced, four declined and 12 issues remained unchanged on the CSE trading floor.
The port-city bourse traded 4.56 million shares and mutual fund units with turnover value of Tk 124 million.

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