Dhaka stocks plunge to steepest single day fall in five months

Dhaka stocks nose-dived Sunday with the benchmark index witnessing steepest single-day fall in five months as anxiety gripped investors over conflicting signals from the authorities.

The main DSE General Index (DGEN) plummeted 81.34 points or 1.85 per cent --- the biggest fall since July 5 --- to close at 4312.24.

The broader DSE All Shares Price Index (DSI) lost 65.80 points or 1.80 per cent to 3576.22 while the DSE-20 blue chip index moved down 37.30 points or 1.46 per cent to 2511.57.

Analysts fell short of describing the fall as a panic sale, but they said the plunge was the compound effect of a series of confusions created by the regulator, the stock exchanges and the government.

"It was an embedded discomfort waiting to explode," Yawer Sayeed, the country's leading stock analyst and the chief executive of Aims Bangladesh fund, said.

The uneasiness became evident minutes after the trading began and continued through rest of the session with 199 issues bleeding red out of the 235 issues traded. Only 34 shares made marginal gain.

Sayeed said the investors have been perplexed by the series of conflicting decisions on securities, new listing, margin rules, mutual funds by the regulators and the government.

"I would say the fall was due to compound effect of the uncertainty being created in the market," said Salahuddin Ahmed Khan, former chief executive of the DSE and a professor of finance at Dhaka University.

"Investors are not sure how they would react to these developments. But I think it would be short-lived. Fundamentals of the market is still sound," he said.

Shares worth Tk 7.48 billion were traded on the day, a decrease of 10.4 per cent over the last session. It was the first time turnover fell below Tk 8.0 billion in three weeks.

A broker said some retail investors reacted negatively to the Securities and Exchange Commission (SEC)'s new criteria on credit facilities for mutual funds.

The SEC Thursday directed merchant banks not to disburse credit to their clients against the mutual funds that trade 7.5 per cent higher than their latest disclosed NAV (net asset value) based on market price.

Some bank-owned brokerage houses also sold off shares en masse to adjust their year-end credit status, in the process dragging the market down, said a banker on condition of anonymity.

Grameenphone, the most weighted issue in DSE, went down for the third consecutive session as it lost 0.58 per cent to close at Tk 170.10 per share.

The banking issues were down by 3.02 per cent as all banks, except state-owned Rupali Bank, ended in the red.

The non-banking financial institutions (NBFIs) lost 2.61 per cent while mutual funds had the highest fall of 4.92 per cent following the latest SEC order on mutual funds

Pharmaceutical sector edged 0.25 per cent lower. Other sectors such as energy, cement, tannery and insurance also declined.

Beximco Ltd, the flag ship company of leading industrial conglomerate Beximco Group, topped the turnover list with shares worth Tk 703.75 million traded.

It was followed by AB Bank, Social Investment Bank Ltd (SIBL), Shahjalal Bank , NCC Bank, Summit Power, Titas Gas, BATBC, Southeast Bank and City Bank.

Pragati Insurance, 1st Prime Finance Mutual Fund, BIFC, 6th ICB, BD Welding, AIMS 1st Mutual Fund, BD Computer, Grameen One Mutual Fund and ICB AMCL 1st Mutual Fund were the leading losers.

The day's major gainers were Berger Paints Ltd, Aftab Automobiles, Reckitt Benckiser, Jamuna Oil, Renata, Mercantile Insurance, IBBLPBOND, Bangas and First ICB.