Stocks tumble 2.8pc on sharp sell-off after floor price removal

With the removal of the 'floor price' this week, the market saw sharp sell-off in stocks that remained unmoved for over a year, dragging the benchmark equity index deeper into correction territory.
The stock market regulator lifted the floor price in two phases from all but 12 big-cap companies, which were believed to be at a risk of freefall and had a huge impact on the index.
On the first trading day after the 'floor price' removal, Dhaka Stock Exchange (DSE) faced an intense sell-pressure, with the key index losing more than 200 points at the opening hour. However, the index recovered in the remaining hours and closed 96 points lower as institutional support and bargain hunters took control.
In the subsequent two trading days, it recovered 36 more points. However, the momentum failed to sustain as bears regained control and the last two days suffered again, wiping out 120 points.
The benchmark DSEX index finally settled the week 180 points or 2.85 per cent lower at 6,156, the lowest since August 2022. This is also the biggest single-week fall in 18 months.
Large-cap stocks such as Beximco Pharma, Beacon Pharma, United Power, ACI, Titas Gas, Summit Power and Fortune Shoes saw major setbacks. These seven stocks contributed a 100-point fall during the week.
As large stocks kept sliding, the market-cap of DSE, calculated by multiplying the total number outstanding shares with the current market price, saw Tk 355 billion wiped out this week, from its record high of Tk 7,884 billion.
Experts said the market faced a big blow as most investors wanted to get rid of their holdings that were stuck on the floor for a long period of time.
Also, rumour sparked on the trading floor in the last two trading days that the securities regulator is going to lift floor price from the remaining 12 large-cap stocks during the week.
The Bangladesh Securities and Exchange Commission had reintroduced floor prices in July 2022 to halt the free-fall of market indices amid the lingering economic impacts of the Russia-Ukraine war.
As the regulator lifted the floor price mechanism, share values were adjusting to their actual level, said a stockbroker.
The panicked investors sold-off major sector stocks, with financial institutions taking a big hit, losing 22 per cent, followed by engineering with 21 per cent, textile 20 per cent, power 16 per cent and ceramic 15 per cent.
The participation of investors, however, was high, as investors got the opportunity to liquidate their holdings and the total turnover stood at Tk 48.52 billion, up from Tk 36.37 billion in the week before.
Accordingly, the average daily turnover reached Tk 9.70 billion, which was more than 33 per cent higher than the previous week's average of Tk 7.27 billion.
The DS30 Index, which consists of blue-chip companies, also plunged 15 points to 2,114 while the DSES index, which represents Shariah-based companies, shed 36 points to 1,352.
Majority of the stocks saw price erosion, as out of the 396 issues traded, 308 saw price fall, 74 advanced and 14 remained unchanged on the DSE trading floor.
The pharma sector dominated the weekly turnover chart, accounting for 13 per cent of the week's total trade, followed by engineering and banking.
Small-cap BD Thai Aluminium became the most-traded stock with shares worth Tk 1.38 billion changing hands.
Khan Brothers PP Woven Bag Industries was the week's top gainer, soaring 49.62 per cent, while GSP Finance was the worst loser, shedding 40.6 per cent.
The Chittagong Stock Exchange (CSE) also ended sharply lower with its All Share Price Index (CASPI) plunging 1,254 points to settle at 17,552 and the Selective Categories Index (CSCX) shedding 737 points to close at 10,510.
The port city bourse traded 38.98 million shares and mutual fund units with a turnover volume of Tk 930 million.

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