Stocks see sharp fall

Stocks witnessed sharp fall last week that ended Thursday with sluggish trading activities as nervous traders reacted to an array of anti-capital market decisions in the proposed budget.

"The higher capital gain tax imposition and withdrawal of the provision for 10 per cent tax rebate for companies declaring more than 20 per cent dividend in the proposed budget disappointed the investors," said an analyst.

The week featured all five trading sessions and four sessions suffered loss while one session closed flat in green.

Week-on-week, DSEX, the prime index of Dhaka Stock Exchange (DSE) went down by 80.40 points or 1.82 per cent to close at 4,328.41 points and touched a five-month low since January 6, this year.

The other two indices also closed negative. The DS30, comprising blue chips, lost 34.62 points or 2.11 per cent to close at 1,603.46 points. The DSE Shariah Index (DSES) went down by 25.27 points or 2.48 per cent to close at 992.97 points.

The port city bourse, the Chittagong Stock Exchange (CSE), also saw sharp decline last week with its Selective Categories Index - CSCX--lost 145.55 points or 1.73 per cent to close the week at 8,264.88 points.

The week's total turnover came down to Tk 13.97 billion on DSE, which was Tk 20.95 billion in the previous week.

The daily turnover for the week averaged Tk 2.79 billion, registering a decline of 33.32 per cent over the previous week's average of Tk 4.19 billion.

"Coupled with substantial profit booking and erosion in confidence among investors, the bourse faced significant downtrend last week," commented IDLC Investments, in its weekly market analysis.

Some positive news, specially Padma Bridge contract signing, could not lure investors much. Participation receded day by day and average daily turnover declined by 33.32 per cent, said the merchant bank.

"Overall market level sentiment deteriorated, significantly and put investors in a tight spot of indecisiveness," the merchant bank added.

"Investors continued to be in bearish mood and there is no apparent buying interest," commented LankaBangla Securities, in its weekly market analysis.

Market sentiment has become very shaky after the budget for 2014-15 proposed some anti-capital market decisions, the stock broker said.

The provision for 10 per cent tax rebate for companies declaring more than 20 per cent dividend has withdrawn which will increase effective tax rate by 275 basis points. All the MNCs pay high dividend, so their effective tax rate will rise, said the stock broker.

They will have to keep higher provision for tax, for both the second quarter (April to June) as well as the first quarter (January to March). Most of the multinational companies' stocks got highly corrected last week, said the stock broker.

Meanwhile, DSE and CSE, Bangladesh Merchant Bankers Association (BMBA) and Bangladesh Association of Publicly Listed Companies (BAPLC) opposed the budgetary measures.

Investors are now waiting to see whether the measures are kept or removed from budget, the stock broker said.

The losers took a strong lead over the gainers as out of 303 issues traded during the week, 238 declined, 52 advanced and 13 issues remained unchanged on the DSE floor.

Except for banks, all the major sectors ended lower in the week. Banks gained 0.03 per cent. Fuel and power was the biggest loser which went down by 4.49 per cent. Pharmaceuticals and food retraced 3.43 per cent and 2.65 per cent respectively. NBFIs lost 1.57 per cent while telecommunications closed almost flat in red.  

Only One company - Delta Life Insurance -- made corporate declaration last week. The life insurer declared 11 per cent cash and 25 per cent stock dividend for the year ended on December 31, 2013.

The market capitalisation of the DSE went down by 1.48 per cent as it was Tk 2,909.23 billion on the opening day of the week and it stood at Tk 2,866.26 billion on closing session of the week.

Lafarge Surma Cement dominated the week's top turnover chart with shares worth Tk 1.17 billion changing hands during the week followed by GP, BSRM Steels, Peninsula Chittagong and Square Pharmaceuticals.

Beximco Limited was the week's top gainer, posting a rise of 9.35 per cent while Renwick Jajneswar & Co. (BD) Ltd was the week's worst loser, slumping by 12.83 per cent.

A new issue -- Peninsula Chittagong, a service sector company, made debut last week on DSE and CSE, but failed to draw considerable response from investors.