Here is why blue chip stocks have kept falling

Market leaders, including Grameenphone and Square Pharmaceuticals, which experienced significant gains on the bourses after the August change in the political regime, endured sharp corrections in recent sessions.

Experts say the companies having the ability to influence the index had witnessed a sharp rise as investors hoped for an improvement in the country's political and economic situation.

But when liquidity dries up in the market, the upward trend of large stocks fails to persist.

In most of the sessions executed after November 19, turnover value on the Dhaka Stock Exchange (DSE) was below Tk 4 billion.

The share price of Grameenphone jumped to Tk 379.2 per share on the prime bourse on August 14, with a 53 per cent appreciation in just seven sessions.

Later, the stock lost momentum and exhibited ups and downs before closing at Tk 319.7 per share on Thursday.

Similarly, after the August 5 political changeover, Square Pharmaceuticals experienced a 10.5 per cent appreciation and closed at Tk 236.4 per share on the Dhaka bourse on August 8.

Afterwards, the company saw small corrections. The stock declined by 7 per cent in the last two weeks.

British American Tobacco Bangladesh Company, Renata, Robi Axiata, Islami Bank, LafargeHolcim Bangladesh, and Heidelberg Materials Bangladesh exhibited a similar pattern of price appreciation and correction post-revolution led by students.

Md. Ashequr Ramhan, managing director of Midway Securities, said the recent correction was quite natural for companies having good fundamentals.

Good stocks were not able to experience appreciation for two years before August 5 as the floor price had restricted price movements.

A sudden change in the political regime elicited a positive sentiment among investors. However, except for a few good changes, political uncertainties and an environment of fear have started to loom large.

Besides, no remarkable development has been observed on the economic front as well, said Mr Rahman.

Therefore, investors, who previously took positions in blue chip stocks, have started to offload their holdings.

Islami Bank and Grameenphone were on the chart of top index draggers on Thursday. The DSEX slid 5.3 points on the day.

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