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Dhaka bourse down on price erosion of blue chips

FE REPORT | May 15, 2024 00:00:00

The Dhaka bourse on Tuesday experienced a sharp decline in the broad index as a majority of listed securities, including blue chips, saw correction.

The Dhaka Stock Exchange (DSE) opened the day's session flat and soon the DSEX started to decline. The trend continued until the closure of the session. No significant recovery move was observed throughout the whole session and the DSEX finally lost 1.43 per cent or 81.14 points to close at 5585.62 points.

Of the 30 blue chip companies, 23, including the market leaders, suffered price erosion. Among the seven other companies, three experienced price appreciation while the stock prices of four others remained unchanged.

Since a majority of the blue chip companies have a large volume of shares floated and a high market value, their decline leaves a significant impact on the index.

The top 10 market draggers included British American Tobacco Company, Square Pharmaceuticals, Beximco Pharmaceuticals and Renata. They jointly wiped out 33.7 points of the broad index.

Subsequently, the DS30 index comprising blue chip stocks witnessed a loss of 1.29 per cent or 26.04 points to close at 1991.92 points.

Ali Imam, chief executive officer of EDGE Asset Management, said the market lacked long-term investors. Besides, many sectors, other than pharmaceuticals, failed to secure profit growth in their latest financial results.

Also, a rise in interest rates and a lack of participation by foreign investors impacted the market badly.

"However, the [newly-introduced] market driven exchange rate can attract foreign investors," Mr. Imam added.

Experts emphasise the need for long-term policies to drive the market.

Investor participation fell on Tuesday. The premier bourse posted a turnover of Tk 6.64 billion, 33.7 per cent lower than the previous session.

Of the 399 issues traded, only 31 advanced, 343 declined and the remaining 25 were unchanged on the DSE floor.

Reliance One, the first scheme of Reliance Insurance Mutual Fund, was the number one gainer with an appreciation of 1.5 per cent to Tk 17.1 per unit.

On the other hand, Union Insurance Company was the worst loser after declining 9.32 per cent to Tk 38.9 per share on the Dhaka exchange.

The maximum 3 per cent daily permissible correction was not applicable to the Union Insurance on Tuesday since the company disclosed its 2023 earnings on Monday. The company gained a 2.26 per cent year-on-year growth in profit to Tk 87.61 million in 2023 and recommended a 10 per cent cash dividend for shareholders for the year.

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