Dhaka stocks witness sharp fall
Tuesday, 10 January 2012
FE Report
Dhaka stocks witnessed a sharp decline Monday and the key index plunged more than three per cent with lower turnover value, as the investors sold shares out of panic.
The market analysts said the investors sold shares out of panic following a host of reasons including the trade body's concern over the country's overall economic condition, upcoming monetary policy and forthcoming political situation.
The leaders of a leading trade body warned Sunday that the economy might enter into a danger zone due to double-digit inflation, the government's excessive borrowing from banks and a dwindling foreign exchange reserve.
The market lost almost 50 points within first hour upon resumption of the day's trading. The downtrend continued throughout the session and finally ended the day 164 points lower.
The benchmark general index of the Dhaka Stock Exchange-DGEN, the main gauge of the market, slipped 164.07 points or 3.02 per cent to close at 5,253.47.
The broader DSE All Shares Price Index (DSI) dropped 135.90 points or 3.0 per cent to close at 4,384.55. The DSE-20 blue-chip index shed 94.11 points or 2.36 per cent to close at 3,885.86.
Mr Akter H Sannamat, former managing director of Prime Finance and Investment, said that the investors sold-off shares out of panic.
The trade body's concern over the country's overall economic condition and upcoming monetary policy may make the investors more cautious, said Mr Sannamat, also a stocks expert.
The investors also took 'wait-and see' policy regarding forthcoming political agitation by main opposition, Mr Sannamat said.
Mr Sannamat also said that there were no supportive players from the government side or any other sides on the day, as a result, the market fell throughout the session.
A stock broker said that media reports regarding government's currency printing to meet its expenses added extra fuel to the existing macro-economic concerns in the form of higher inflation, weakening Taka against dollar as well as shrinking foreign exchange reserve.
In addition, the market's expectation seems heavily skewed towards a tight monetary policy for the first half of 2012 which presumably will not be friendly for the capital market, he said.
All this led traders to engage in risk off trade which towards the latter part of the trading session turned into panic sale, he added.
However, Mr AB Mirza Azizul Islam, former finance adviser of a caretaker government, said that there was no valid reason for such a big fall.
Perhaps, a group wanted to buy shares at lower prices by creating panic among the investors, he commented.
"The Securities and Exchange Commission (SEC) should investigate who creates such a big sell-pressure and take initiative immediately," said Mr Islam, also former chairman of the SEC.
The turnover value declined to Tk 5.38 billion in value term, down by 12.52 per cent compared to Tk 6.15 billon in the previous session.
The losers took a strong lead over the gainers, as out of 262 issues traded, only 12 advanced, 245 declined and five remained unchanged.
A total of 106.35 million shares changed hands on the day against 112.04 million in the previous session. The trade deals also decreased to 143,329 against Sunday's 158,070.
Total market capitalisation of the DSE declined to Tk 2,632.32 billion against Tk 2,696.13 billion in the previous session.
All sectors ended in the red, as sell pressure witnessed all across the board with NBFIs sector was the highest loser on the day and lost 4.30 per cent.
Among other sectors --- bank sector lost 2.84 per cent, while telecommunications 2.66 per cent and fuel and power and pharmaceuticals more than 2.0 per cent each.
Grammenphone (GP), the lone listed company of the telecommunications sector, topped the turnover chart with shares worth Tk 274.06 billion changed hands.
The other turnover leaders were National Bank, SIBL, United Airways, Beacon Pharma, Beximco Limited, Fu-Wang Ceramics, RN Spinning, Aftab Automobiles and Golden Son.
Northern Jute Manufacturing was the day's top gainer posting a rise of 9.91 per cent.
It was followed by BD Autocars, Information Services Network, Pragati Life Insurance, National Tea Company, Meghna Condensed Milk, Standard Ceramics, AIBL First Mutual Fund, Samata Leather and Southeast Bank First Mutual Fund.
Kohinoor Chemicals was the worst loser and lost 8.14 per cent followed by Meghna Pet, Savar Refractories, United Insurance, Purabi General Insurance, Meghna Cement, Usmania Glass, Fourth ICB, National Housing Finance and Investment.
Dhaka stocks witnessed a sharp decline Monday and the key index plunged more than three per cent with lower turnover value, as the investors sold shares out of panic.
The market analysts said the investors sold shares out of panic following a host of reasons including the trade body's concern over the country's overall economic condition, upcoming monetary policy and forthcoming political situation.
The leaders of a leading trade body warned Sunday that the economy might enter into a danger zone due to double-digit inflation, the government's excessive borrowing from banks and a dwindling foreign exchange reserve.
The market lost almost 50 points within first hour upon resumption of the day's trading. The downtrend continued throughout the session and finally ended the day 164 points lower.
The benchmark general index of the Dhaka Stock Exchange-DGEN, the main gauge of the market, slipped 164.07 points or 3.02 per cent to close at 5,253.47.
The broader DSE All Shares Price Index (DSI) dropped 135.90 points or 3.0 per cent to close at 4,384.55. The DSE-20 blue-chip index shed 94.11 points or 2.36 per cent to close at 3,885.86.
Mr Akter H Sannamat, former managing director of Prime Finance and Investment, said that the investors sold-off shares out of panic.
The trade body's concern over the country's overall economic condition and upcoming monetary policy may make the investors more cautious, said Mr Sannamat, also a stocks expert.
The investors also took 'wait-and see' policy regarding forthcoming political agitation by main opposition, Mr Sannamat said.
Mr Sannamat also said that there were no supportive players from the government side or any other sides on the day, as a result, the market fell throughout the session.
A stock broker said that media reports regarding government's currency printing to meet its expenses added extra fuel to the existing macro-economic concerns in the form of higher inflation, weakening Taka against dollar as well as shrinking foreign exchange reserve.
In addition, the market's expectation seems heavily skewed towards a tight monetary policy for the first half of 2012 which presumably will not be friendly for the capital market, he said.
All this led traders to engage in risk off trade which towards the latter part of the trading session turned into panic sale, he added.
However, Mr AB Mirza Azizul Islam, former finance adviser of a caretaker government, said that there was no valid reason for such a big fall.
Perhaps, a group wanted to buy shares at lower prices by creating panic among the investors, he commented.
"The Securities and Exchange Commission (SEC) should investigate who creates such a big sell-pressure and take initiative immediately," said Mr Islam, also former chairman of the SEC.
The turnover value declined to Tk 5.38 billion in value term, down by 12.52 per cent compared to Tk 6.15 billon in the previous session.
The losers took a strong lead over the gainers, as out of 262 issues traded, only 12 advanced, 245 declined and five remained unchanged.
A total of 106.35 million shares changed hands on the day against 112.04 million in the previous session. The trade deals also decreased to 143,329 against Sunday's 158,070.
Total market capitalisation of the DSE declined to Tk 2,632.32 billion against Tk 2,696.13 billion in the previous session.
All sectors ended in the red, as sell pressure witnessed all across the board with NBFIs sector was the highest loser on the day and lost 4.30 per cent.
Among other sectors --- bank sector lost 2.84 per cent, while telecommunications 2.66 per cent and fuel and power and pharmaceuticals more than 2.0 per cent each.
Grammenphone (GP), the lone listed company of the telecommunications sector, topped the turnover chart with shares worth Tk 274.06 billion changed hands.
The other turnover leaders were National Bank, SIBL, United Airways, Beacon Pharma, Beximco Limited, Fu-Wang Ceramics, RN Spinning, Aftab Automobiles and Golden Son.
Northern Jute Manufacturing was the day's top gainer posting a rise of 9.91 per cent.
It was followed by BD Autocars, Information Services Network, Pragati Life Insurance, National Tea Company, Meghna Condensed Milk, Standard Ceramics, AIBL First Mutual Fund, Samata Leather and Southeast Bank First Mutual Fund.
Kohinoor Chemicals was the worst loser and lost 8.14 per cent followed by Meghna Pet, Savar Refractories, United Insurance, Purabi General Insurance, Meghna Cement, Usmania Glass, Fourth ICB, National Housing Finance and Investment.