With floor price imposed, many fundamentally-strong large cap companies have been enduring liquidity crisis for long, which is why, experts think, the latest routine revision of DS30 is not justified.
Eleven companies, including Robi Axiata, fell off the index this time mostly because of not meeting the criterion of three-month minimum daily average turnover of Tk 5 million.
Most of the blue-chip stocks have remained confined to the floor in absence of the market's price discovery mechanism.
On the other hand, small cap companies have seen higher investor participation as the stocks make moves on the bourses with lower transactions boosting hopes for quick gains. Speculations also drive up such stocks.
In such a circumstance, market leaders, based on market value, such as Robi, Power Grid Company of Bangladesh, and Titas Gas Transmission & Distribution Company, have not met the requirement of minimum daily traded volume whereas they had once been among the top turnover leaders in the pre-floor price market.
IDLC Finance, one of the best financial institutions; BSRM Steel, the largest steel maker, and IFIC Bank, one of the largest listed banks, are also out of the index.
The Dhaka Stock Exchange (DSE) last week revised the DS30 index excluding 11 companies. The revised index will be effective today (Sunday).
The present market situation is an unusual or "special circumstance" in which the stocks turned illiquid, said Md. Ashequr Rahman, managing director of Midway Securities.
Apart from liquidity, a company's auditing standards, free float shares, and corporate governance should be key factors in deciding that a company is a blue-chip stock, he added.
A blue-chip is considered a reputed, well-recognised brand to have in one's portfolio.
Some of the companies, including Robi, which have been excluded from the index, maintain world class audit standards, said Mr Rahman. "The audit standards of the newly-included Rupali Life Insurance will not be like Robi's."
Rupali Life Insurance is the one of the insurance companies which exhibited rally without any justified reasons and entered the blue-chip index. Its auditor mentioned a mismatch in its financial statement for 2021.
The second largest telecom operator, Robi's market cap is Tk 157 billion, Titas Gas's Tk 40.45 billion, and United Power Generation & Distribution Company's Tk 135 billion.
Power Grid and IDLC Finance, with a market value of Tk 19 billion and Tk 37 billion, have lost the status of blue-chip stock too.
Rupali Life's market cap is only Tk 4.63 billion. Eastern Housing, Genex Infosys and ADN Telecom also entered the blue-chip index with a market cap of Tk 8.35 billion-Tk 9.44 billion.
Asif Khan, chairman of EDGE Asset Management, said inclusion and exclusion of companies in and from the index do not matter much to general investors.
"But mature local and foreign investors judge the depth of a market by looking at blue-chip stocks."
Research organisationsations, or even Bloomberg follows the DS30 index, said Mr Rahman.
"They may get a wrong perception regarding blue-chip companies [of the Bangladesh's market] if they become aware of poor audit standards of one or two companies."
The DSE could consider other factors in reviewing the blue-chip index taking into account the special circumstance created by the floor price, Mr Rahman added.
The DSE could not foresee a market like today's to set the criteria for listing or delisting of companies in and from the index, but the current market situation demands reevaluation of those.
Float-adjusted market value surpassing Tk 500 million and mandatory profitability over the 12 months to the reference date are two other conditions to be met by a stock to stay in the index.
Morgan Stanley earlier decided not to review the index of Bangladesh's capital market as it remained stuck at the floor price.
"In other countries, there are instances of revising index calculation methodology considering odd situations. The DSE could also do it," said Mr Khan.
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