Sectoral indices for stocks soon
Saturday, 20 March 2010
Mohammad Mufazzal
Country's bourses are set to introduce sector indices within three or four months as the DSE General Index (DGEN) fails to represent the actual performance of every sector, DSE high officials and president of Chittagong Stock Exchange (CSE) said.
The move is taken after regular disturbance on DGEN calculation since the listing of giant telecom company Grameenphone (GP) whose paid-up capital is about 8.50 per cent of the total market capital.
If the price of the GP shares increases by Tk 1.00, the overall index gains around four per cent. Similarly, the index loses four per cent if the GP loses Tk 1.00 per share. Thus investors become disheartened off and on because of GP's impact on general index despite better performance of other sectors.
"If a small number of shares of GP are traded, the overall index has to bear a sharp gain or decline because of its large paid-up capital. That's why, if the price of this company goes down the overall index loses noticeable points, which indicates an alarming trend in the market," a high official of the DSE said.
The DSE official said the overall index would also be calculated along with the sector index but the investors are expected to rely on the sector index during selling and buying of their shares.
"DSE calculates sector index on a regular basis but it is not published on the DSE website," an official of DSE Research and Development (R&D) department said.
"When the sector index will be launched, the investors will sell and buy their shares justifying the individual index of a sector. Then they will not be worried about the fall of the overall index," the official said.
He said there is also a possibility to omit DSE-20 and in that case DSI-20 will be rearranged including more companies on the basis of dynamic fundamentals.
Chittagong Stock Exchange (CSE) President Fakhor Uddin Ali Ahmed also expressed similar view on introducing sector index.
"If the share price of GP goes up a little bit, the General Index also sharply goes up, despite poor performance of another big sector. The opposite scenario is noticed if the share price of GP goes down," CSE president said.
"It's not true that if GP falls, other sectors also go into red. But this single scrip triggers creation of panic among the investors," he said.
"That's why the sector-wise index should be introduced in the stock market for displaying the actual performance of every sector," he said.
Mansur Alam, a member of Securities and Exchange Commission (SEC) said, "The responsibility of calculating any kind of index is in the hands of the DSE."
Country's bourses are set to introduce sector indices within three or four months as the DSE General Index (DGEN) fails to represent the actual performance of every sector, DSE high officials and president of Chittagong Stock Exchange (CSE) said.
The move is taken after regular disturbance on DGEN calculation since the listing of giant telecom company Grameenphone (GP) whose paid-up capital is about 8.50 per cent of the total market capital.
If the price of the GP shares increases by Tk 1.00, the overall index gains around four per cent. Similarly, the index loses four per cent if the GP loses Tk 1.00 per share. Thus investors become disheartened off and on because of GP's impact on general index despite better performance of other sectors.
"If a small number of shares of GP are traded, the overall index has to bear a sharp gain or decline because of its large paid-up capital. That's why, if the price of this company goes down the overall index loses noticeable points, which indicates an alarming trend in the market," a high official of the DSE said.
The DSE official said the overall index would also be calculated along with the sector index but the investors are expected to rely on the sector index during selling and buying of their shares.
"DSE calculates sector index on a regular basis but it is not published on the DSE website," an official of DSE Research and Development (R&D) department said.
"When the sector index will be launched, the investors will sell and buy their shares justifying the individual index of a sector. Then they will not be worried about the fall of the overall index," the official said.
He said there is also a possibility to omit DSE-20 and in that case DSI-20 will be rearranged including more companies on the basis of dynamic fundamentals.
Chittagong Stock Exchange (CSE) President Fakhor Uddin Ali Ahmed also expressed similar view on introducing sector index.
"If the share price of GP goes up a little bit, the General Index also sharply goes up, despite poor performance of another big sector. The opposite scenario is noticed if the share price of GP goes down," CSE president said.
"It's not true that if GP falls, other sectors also go into red. But this single scrip triggers creation of panic among the investors," he said.
"That's why the sector-wise index should be introduced in the stock market for displaying the actual performance of every sector," he said.
Mansur Alam, a member of Securities and Exchange Commission (SEC) said, "The responsibility of calculating any kind of index is in the hands of the DSE."