Dhaka stocks continue to fall

FE Report Dhaka stocks plummeted for the second straight session Monday amid volatility, as investors reacted negatively to the central bank's interest rate hike effort fearing further liquidity dearth in the stock market. The market was in down trend throughout the trading session amidst lack of buying pressure, as index ended firmly in negative territory. The index was resting marginally above 6,140 points having lost around 50 points at the end of trading. The benchmark General Index of the DSE, the yardstick of the market, plunged 51.28 points or 0.82 per cent to close at 6,141.79. The broader All Shares Price Index (DSI) went down by 40.86 points or 0.78 per cent to close at 5,144.23. The DSE-20 Index comprising blue-chip shares also lost 30.87 points or 0.73 per cent to close at 4,154.18. Professor Mahmood Osmam Imam, a finance teacher at the Dhaka University, said though the market closed negative the overall market sentiment is still good. "The market's turnover value is sluggish as most of the investors are yet to come to the market following nine-day Eid vacation," Mr Imam commented. However, he said "The central bank's latest move relating to policy interest rate hike will further restrict credit flow from banks into private sector and is not good news for the capital market which is suffering from liquidity crunch." The central bank hiked its policy interest rates by 50 basis points after more than two months to curb inflationary pressures on the economy which came into effect from Monday. "Investors reacted negatively to the interest rate hike fearing further liquidity dearth in the stock market. Specially, increasing repo rate will make the short-term borrowing more expensive for the banks and financial institutions," commented LankaBangla Securities in its daily market analysis. Share prices of most of the issues traded on the day declined. Out of 255 issues traded, only 34 advanced and 207 declined while 14 remained unchanged. However, turnover increased slightly and stood at Tk 3.72 billion in value terms, up by 21.92 per cent, from Tk 3.05 billion in the previous session. A total of 40.16 million shares changed hands on the day against 33.80 million in the previous trading session. The trade deals also increased to 83,380 against Sunday's 75,841. Total market capitalisation of the DSE, however, declined slightly to Tk 2,927.47 billion against Tk 2,949 billion in the previous session. All sectors except fuel and power ended in red zone as selling pressure witnessed all across the board. Banking sector, the market's bellwether of the DSE, lost 1.10 per cent, whereas insurance, NBFIs and textile sectors declined by 1.0 per cent, 1.30 per cent and 2.30 per cent respectively. Fuel and power sector was the only sector which ended in the green zone appreciating by 0.27 per cent as state-owned companies---Titas Gas and Power Grid in particular, gained well. Grameenphone (GP), the most weighted shares and lone listed company in the telecommunications sector lost Tk 3.30 per share and closed at Tk 175.1 and the sector lost 1.52 per cent. Out of 30 listed banks in the banking sector, only one bank gained and one unchanged while rest 28 suffered losses. The state-owned company Titas Gas topped the turnover list with shares worth Tk 288.35 million changed hands. The other turnover leaders were Lafarge Surma Cement, Square Pharma, Meghna Petroleum, Beximco Limited, City Bank, Malek Spinning, Jamuna Oil, Grameenphone and ONE Bank. Phoenix Finance First Mutual Fund was the day's highest gainer posting a rise of 4.44 per cent. It was followed by Titas Gas, Renata, Power Grid, MBL First Mutual Fund, Square Pharma, ACI, DESCO, Anlima Yarn and The Ibn Sina. EBL NRB Mutual Fund was the day's top loser followed by DBH First Mutual Fund, ICB AMCL Islamic Mutual Fund, ICB AMCL First Mutual Fund, Second ICB, CMC Kamal, Rahim Textile, Malek Spinning, Aramit and Monno Jutex.