• Monday, Dec 09, 2019
  • Last Update : 12:33 am

Investors pushed to limits amid free fall of stocks

  • Published at 10:43 pm October 14th, 2019
DSE stock
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The prime index lost 1,239 points or 20.8% from its highest hit of 5,950 points, since January 24 this year

The investors now have their back up against the wall as they are losing money every day amid free fall in key indices of the country’s stock markets. 

In last six trading sessions, DSEX, the key index of the Dhaka Stock Exchange (DSE) lost 226 points. 

The prime index lost 1,239 points or 20.8% from its highest hit of 5,950 points, since January 24 this year. 

In a single session on Monday, the premiers bourses lost 50 points.

Market operators said that issues like prevalence of junk stocks, lack of demonstrable long-term initiative from regulators, listing of quality IPO kept investors worried for the last couple of months.

This depressed market outlook has forced investors to sell their stocks, leading to further volatility of the market in recent times.

The stock investors suffered huge losses due to continued price fall over the last few months, said market insiders.

They also said a group of investors were counting on the bearish condition and trying to push up the price of weaker stocks.

On Monday, DSEX shed 50.57 points settling at 4,711.31 at the end of the session which was the lowest since November 2016. Turnover remained below Tk300 crore mark at Tk299 crore. 

UCB Capital Management Ltd in its daily market analysis said that the investors' activities were mostly concentrated on pharmaceuticals and engineering sectors. All the sectors faced correction except general insurance.

The port city bourse, CSE, shed 106 points in its broad based index-CASPI.

Meanwhile, the state-run Investment Corporation of Bangladesh (ICB) and the DSE Brokers Association of Bangladesh (DBA) sat in an emergency meeting on Monday at ICB headquarters. 

The meeting was informed that the ICB would invest Tk200 crore in the capital market to ensure available liquidity in the fund-crunch market. 

ICB Managing Director Md Abul Hossain said on the day: "We received Tk200 crore from  Sonali Bank, which will be invested in the stock market to support the market with liquidity and restore confidence of the investors."

On Sunday, to prop up the market, ICB sought Tk2,000 crore emergency fund from Bangladesh Bank and five state-run banks.

On the other hand, a group of small investors are set to hold protests in front of Dhaka Stock Exchange building at Motijheel under the banner of Bangladesh Pujibazar Biniogkari Oikya Parishad today, said the Parishad President Mizan-ur-Rashid Chowdhury. 

Market operators and analysts said investors continued their selling spree amid lack of confidence and liquidity crisis in the market. Grammenphone issue of paying huge dues to the government continued to haunt the investors' sentiment.

They also said the recent drop in the stock market was due to confidence crisis. Financial institutions were suffering from liquidity pressure, so their participation has remained low.

Foreign investors are selling off their shares due to the lack of confidence and depreciation of local currency against the US dollar.

The net foreign investment plunged to Tk61 crore negative in September after Tk102 crore negative in August. The foreign investors withdrew around Tk680 crore from the market in seven months to September this year.

Former president of DSE Brokers Association (DBA) Ahmad Rashid Lali said: “Both local and foreign investors are pulling funds from the market, sending a wrong message to the small investors”.