The benchmark index at Dhaka Stock Exchange fell by 1.14% as sellers have outnumbered buyers, clearly in reaction to the proposed tax on capital gains in the new national budget.
The bourse witnessed sharp fall despite having a trade value of Tk416 crore, which was above the monthly average.
Brokers believe the tax-free ceiling of dividend income has cast shadow over the market, which was 3% to 5% on realised capital gains that starts from a gain above Tk10 lakh.
They said investors are, however, not clear about the details of the new measures and when will these be implemented, and this type of uncertainty is also looming around the trading floor amid selling spree.
The fear among small-scale investors is perhaps psychological than a real one because a capital gain of Tk10 lakh would require a large amount of investment, said Md Moniruzzaman, managing director of IDLC Investments.
Brokers, however, expressed concerns that the big players mainly drive the markets and upsetting them may directly affect the small-scale investors.
The bourses on Saturday have questioned the feasibility of the new rule, which would also require revamping the existing trading system due to insufficient infrastructure.
“The market at this particular time needs a support and such negatively effective rules should be reconsidered for the sake of the investors,” said Syed Sajid Husain, managing director of Chittagong Stock Exchange (CSE).
Analysts have backed the measures, but few of them argued for a better timing.
Such measure is no different from tax on interest or dividend income, said Shahidul Islam, CEO of VIPB Asset Management Co Ltd.
He added: “It’s fair to impose some tax on capital gain but tax should be higher in case of short-term gains and lower in case of long-term one.”
Equity market experts hinted that a chance of tracking manipulators might become easier with more information of the equity market gamblers.
