Dhaka stocks again see free fall, waning turnover

FE Report Dhaka stocks again witnessed sharp decline Tuesday with further declining turnover, as the regulatory and monetary initiatives apparently failed to revive investors' confidence and bring back stability in the stock market. Market insiders said the investors became confused following the finance minister's announcement that he decided to withdraw himself as chairman of the five-member advisory council, formed Sunday to monitor the capital market. During the trading hours, Finance Minister A M A Muhith told reporters at his ministry that he has made a mistake as he cannot hold the post of chairman of the council, and the government will soon appoint a new chairman for it. The market opened with a positive note, gaining more than 35 points within five minutes of trading. After that it started declining and the trend continued until the end amid moderate ups and downs. DGEN, the benchmark index and yardstick of the Dhaka Stock Exchange (DSE), went down by 116.47 points or 2.14 per cent to close at 5,307.43. The broader All Shares Price Index (DSI) plunged 94.93 points or 2.08 per cent to close at 4,452.94. The DSE-20 Index comprising blue-chip shares also plummeted 53.63 points or 1.39 per cent to close at 3,783.01. Earlier in the morning, policemen dispersed the small investors, observing hunger strike in front of the National Press Club. Law-enforcers had also dispersed them Monday from in front of the DSE, their original protest venue. Investors under the banner of Bangladesh Capital Market Investors Oikya Parishad started observing hunger strike until death from Sunday, demanding restoration of normalcy and stability in the stock market. Later, the investors tried to gather at the Central Shaheed Minar to con tinue their programme, but policemen dispersed them and picked up Mizanur Rahman, publicity secretary of the organisation. The leaders of the organisation brought allegation of harassment against the law-enforcers while observing peaceful hunger strike. Additional policemen were also deployed in front of the DSE, so that the investors cannot gather there. Mr Yawer Sayeed, managing director and CEO of AIMS of Bangladesh, said police action in small investors' peaceful programme was unexpected. "Police action in the programme is very much unexpected, and it is not a solution to overcome the ongoing problem." The small investors are feeling more panicked, following the law-enforcers' intervention in their peaceful programme. It is not a good step for stabilising the market, Mr Sayeed said. The investors became more frustrated following the police action, though the government and market regulator have taken various positive measures, he added. A market insider said the investors became confused following the finance minister's announcement. Uncertainty gripped the market along with prevailing liquidity crunch. As a result, market activities and turnover declined significantly. The downfall came a day after the government had decided to reintroduce the provision of tax rebate on stock market investment, withdraw 10 per cent tax on the mutual funds, and reduce tax at source on brokerage commission to 0.05 per cent to boost the investors' market participation. Despite all these positive initiatives the market saw only Tk 2.09 billion trade value - the lowest since January 25. On that day the turnover value was Tk 2.06 billion. The low trading volume suggests that the market lacks institutional participation and suffers from liquidity crunch, a stock broker said. To increase banks' participation in the market, the central bank governor urged the banks, having stock market investment of less than 10 per cent of their respective liability, to go for further investment. A total of 29.94 million shares changed hands on the day against 32.14 million in the previous session. The number of trade deals also declined to 70,154 against Monday's 73,598. The DSE's total market capitalisation declined to Tk 2,612.22 billion against Tk 2,656.49 billion in the previous session. Out of 258 issues traded on the day, only 18 advanced, 234 declined, and six remained unchanged. All sectors closed to red, as selling pressure dominated the market scenario. Among the majors sectors, banking sector lost 2.05 per cent, NBFIs 3.23 per cent, telecommunications 1.74 per cent, pharmaceuticals 1.45 per cent, and fuel and power lost 1.44 per cent. Titas Gas topped the turnover list with shares worth Tk 86.47 million changing hands. The other turnover leaders were Beximco Limited, Summit Power, Grameenphone, Keya Cosmetics, M I Cement, ONE Bank, UCBL, Islami Bank and Beximco Pharma. LR Global Mutual Fund was the day's highest gainer, posting a rise of 3.09 per cent. It was followed by Third ICB, Fourth ICB, Reckitt Benckiser, National Polymer, Second ICB, ICB First NRB Mutual Fund, Libra Infusion, BOC Bangladesh and Information Services Network. The day's worst losers included Northern Jute Manufacturing Company, Deshbandhu Sugar Mills, Imam Button, Sinobangla Industries, Desh Garment, Salvo Chemicals, Square Textile, Mercantile Insurance, BD Autocars and Aziz Pipes.