Banking scrips continued experiencing sell pressure due mainly to the tension around the single digit interest rate policy
The bearish trend in the country's prime bourse extended for the last three days, shedding 178 points in its key index and Tk8,889 crore market value in the last three consecutive sessions as the investors continued to offload their holdings.
The depressed market outlook kept the investors worried as the key index fell below the psychological 4,300-level which was not seen since 15th May, 2016.
Banking scrips continued experiencing sell pressure due mainly to the tension around the single digit interest rate policy. The banking sector shed 1.6% on Tuesday; Brac Bank was the worst hit with 4.9% fall.
Investors became concerned about the banks’ profitability as the government decided to bring down banks’ lending rate to single digits, market analysts and insiders say.
They have also attributed the bearish trend to liquidity crisis, aggressive bank borrowing by government, declining outstanding foreign portfolio investment, sluggish earning growth and poor payout ratio of listed companies.
Beside, tussle between Grameenphone and telecom regulator and post-dividend free-fall price adjustment of large cap companies to hurt the market.
Key index of Dhaka Stock Exchange (DSE), DSEX closed at 4,281.4 points on Tuesday after losing 50.5 points or 1.17% during the session while broad index of Chittagong Stock Exchange (CSE), CASPI declined 1.69% to close at 13,010.5 points.
DSE Shariah-based index DSES declined 1.03% to end at 972.9 points, while blue-chip index, DS30 went down by 1.08% to close at 1,436.3 points.
Participation in the Dhaka Stock Exchange stood at Tk327.5 crore during the session, which was Tk375.8 crore in the previous session.
The banking sector contributed 14.8% of the total turnover while insurance, engineering and telecommunication sectors contributed 14%, 13.3% and 9.9% respectively, showed the daily market analysis of UCB Capital Management Limited.
International Leasing Securities Limited in its daily market commentary said that the panicked investors liquidated their holding from almost all the sectors that contributed to the massive fall in indices by 50.5 points.
“The Investor’s selling appetite was observed almost from the beginning of the session which continued till the end despite the enthusiastic investors’ effort to reverse the trend in the middle” it said.
Former Bangladesh Securities and Exchange Commission Chairman Faruque Ahmed Siddique said lack of governance in the country’s banking sector and capital market were the main reasons that gradually weakened the market.
On Tuesday, among the traded issues 42 gained, 269 declined and 43 remained unchanged during the session in Dhaka Stock Exchange while 41 gained, 186 declined and 21 remained unchanged in Chittagong Stock Exchange.
The Dhaka Stock Exchange currently has a market capitalization of Tk330,663 crore with the benchmark index DSEX down by 3.85% since the beginning of this year.
On December 30, Finance minister AHM Mustafa Kamal announced that the banks on April 1 would implement 9% lending rate for all sectors.