2020-06-06 16:02:36 BdST
Weekly Review: Twin perils hit stocks hard
Stocks plunged in the outgoing week, the first week after two months break, as the growing tension over the impacts of Covid-19 pandemic and the new 'floor price' system.
Both the perils kept investors at bay.
Week-on-week, DSEX, the key index of the Dhaka Stock Exchange, went down by 55 points or 1.37 per cent to settle at 3,953.
The bourses cut an hour trading time from the resumption of trading May 31 to three hours instead of the usual four hours due to the ongoing Covid-19 pandemic.
The outgoing week saw five trading sessions as usual. Of them, the first session gained 52 points while the last four eroded 107 points.
The presence of investors was thin on the trading floor throughout the week as many investors are yet to back in Dhaka after the longest closure of the market since the Liberation War.
The brokerage houses also discourage their clients from rushing in the houses physically and inspire for executing their trade through internet-based devices and mobile apps due to the ongoing pandemic.
Two other indices also edged lower. The DS30 index, comprising blue chips, fell 9.34 points to finish at 1,321 and the DSE Shariah Index lost 4.73 points to settle at 916.
The week's total turnover on the DSE stood at Tk 6.92 billion, down from Tk 8.88 billion in the week before.
The daily turnover averaged Tk 1.38 billion, which was 38 per cent lower than the previous week's average of Tk 2.21 billion.
Market operators said lack of institutional buyers coupled with the current floor price limitation is preventing many investors from buying and selling shares, brining turnover to a record low.
"Under the existing system the buyers have not enough scope to purchase securities at their desired prices," said a merchant banker.
He noted that investors are keeping their hands off to see how the market behaves after the regulator withdraws the floor price.
The index may slump more abruptly when the floor price is withdrawn because it is not possible to keep the stock price up artificially, he said.
The stock market regulator imposed the floor price on March 19 for all stocks on the basis average price of last five days to stop the massive fall of the index amid the virus scare.
"Investors fear further economic contraction and lower earnings of the listed companies due to the backdrop of Covid-19 crisis which fuelled indices downturn," according to EBL Securities.
The stockbroker noted that the current floor price limitation is impeding many investors' willingness of liquidating their portfolios which is causing low turnover in the market.
Most of the shares were stuck at the trading floor due to floor price limitation and very few buyers came and picked some of the offered shares.
Of the traded issues, 218 remained unchanged while only 25 issues advanced and 115 declined on the DSE trading floor last week.
The Chittagong Stock Exchange (CSE) also ended lower with its CSE All Share Price Index - CASPI - losing 91 points to settle at 11,237 and the Selective Categories Index - CSCX - shedding 51 points to close at 6,808.
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