Stocks witnessed a major correction Wednesday as prime index of the Dhaka Stock Exchange (DSE) dipped below 5,600-mark after nine months.
Market operators said the retail investors continued their selling spree to avoid further loss while the institutional investors could not support the market more due to ongoing liquidity crisis, taking the core index below 5,600-mark after June 21 last year.
"The persistent liquidity problem in the banking sector continued to push banks' deposit interest rate high and lured many investors to put money in banks instead of investing in capital market which was taking a toll on the capital market," said an analyst at a leading brokerage firm.
He noted that investors' confidence remains low due to the ongoing liquidity crisis.
"Lower than expected dividend declaration of a listed bank on the day exacerbated the situation," said a stockbroker.
United Commercial Bank (UCB) recommended only 10 per cent cash dividend for the year ended on December 31, 2017. In 2016, the bank disbursed 15 per cent cash dividend. In 2015, the bank paid 20 per cent cash and 5.0 per cent stock dividend.
Following the low dividend recommendation, the UCB's share price slumped 7.14 per cent to close at Tk 18.20.
The banking sector also posted the highest correction of 2.80 per cent as prices of 28 banks closed lower while two remained unchanged.
Following the previous two days' downward movement, the Dhaka bourse and the Chittagong Stock Exchange (CSE) opened on downward trend which sustained till end of the session with no sign of reversal.
Finally, DSEX, the benchmark index of the DSE, went down by more than 76 points or 1.36 per cent to settle at 5,572. It was the lowest level of DSEX since June 21, 2017.
EBL Securities, said, the ongoing bearish streak created concern among the investors and disappointed dividend declaration accelerated the market fall.
According to International Leasing Securities, investors mostly sold their position from the bank, mutual fund, financial institution, fuel & power, engineering and telecommunication sectors with the anticipation of further correction.
The two other indices of the premier bourse also ended lower. The DS30 index, comprising blue chips, fell 17.36 points to finish at 2,085 and DSES (Shariah) index slumped 11.08 points to settle at 1,322.
Trading activities, however, increased and the total turnover on the major bourse amounting to Tk 3.52 billion, which was 45 per cent higher than the previous day's turnover of Tk 2.42 billion.
The banking sector dominated the turnover chart, accounting for 15.70 per cent of the day's total turnover, followed by pharmaceuticals with 15 per cent and engineering 14.5 per cent.
All the major sectors closed lower with the banking sector posted the highest correction of 2.80 per cent, followed by non-bank financial institutions with 2.0 per cent and fuel & power 1.10 per cent.
Telecommunication, engineering, food & allied and pharmaceuticals also lost 0.90 per cent, 0.70 per cent, 0.70 per cent and 0.20 per cent respectively.
Prices of 80 per cent traded issues declined as out of 337 issues traded, 268 closed lower, 50 ended higher and 19 issues remained unchanged on the DSE trading floor.
Port city bourse CSE also saw major correction with the CSE All Share Price Index - CASPI -slumping by 212 points to settle at 17,237 points and Selective Categories Index - CSCX -shedding 129 points to finish at 10,412 points.
Here too, the losers beat the gainers as 180 issues closed lower, 30 ended higher and 17 remained unchanged on the CSE.
The port city bourse traded 5.69 million shares and mutual fund units worth more than Tk 281 million in turnover.
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