Dhaka stocks plunged for the second day on Wednesday as investors went for panic selling amid their worries over the country’s political situation and the Bangladesh Bank’s move to cut banks’ lending.
DSEX, the key index of Dhaka Stock Exchange, lost 1.43 per cent, or 88.01 points, to close at 6,039.78 points on Wednesday after losing 48.64 points in the previous trading session.
In line with the previous session, the market began to drop steeply from the very beginning slumping by more than 115 points in one point as investors, already worried over the political tension surrounding the corruption cases against Bangladesh Nationalist Party chairperson Khaleda Zia, became panicked over the BB’s decision on Tuesday evening to cut banks’ advance-deposit ratio.
Market operators said in brokerage houses most of the investors’ main talking point on Wednesday was where the political situation in the country was heading to amid the trial of Khaleda and the protest by her party’s workers on Tuesday and the subsequent arrest of BNP leaders, including senior leader Gayeshwar Chandra Roy.
On Tuesday, BNP activists allegedly snatched away two of their fellows vandalising a prison van in front of the High Court area in the afternoon. Police detained 69 leaders and activists of the party later on the day.
Investors have remained worried for last two days over the political uncertainty ahead of the verdict in a corruption case against Khaleda to be announced by a special court in Dhaka on February 8.
BNP leaders warned earlier that the party would not go to polls if Khaleda is sent to jail while the government said that it would go for tough action against any unrest surrounding the verdict.
Market operators said the BB’s move to cut banks’ ADR by 1-1.5 percentage points also fuelled the investors’ panic on Wednesday.
Bankers said that the move would deepen liquidity crisis and increase interest rate that might create haphazard in the financial market ahead of the elections.
Each of the banks might have required to pool an estimated Tk 6,000-Tk 8,000 crore more to adjust with the set ADR and Tk 3,000-Tk 5,000 crore would be pulled out from the banking system for election spending that reflects the reason for the economists’ concern.
Bankers worried that the latest BB move would result in rate race among the banks for deposit collection, again resulting in a rise in interests on both deposit and lending products.
All the sectors dipped on Wednesday while financial sectors weighed most on the index.
The average share prices of non-bank financial institution and bank sectors slumped by 2.33 per cent and 1.69 per cent respectively. Besides, energy, pharmaceuticals and telecommunication also declined on the day.
DS30, the blue-chip index of the DSE, also slumped by 1.23 per cent, or 28.05 points, to close at 2,238.95 points after losing 26.96 points in the previous session.
Out of the 30 blue chips, 26 declined and just four advanced on the day.
Among them, the share prices of LankaBangla Finance, BRAC Bank and Grameenphone slumped by 5.7 per cent, 4.29 per cent and 0.99 per cent respectively.
The turnover at the bourse, however, increased to Tk 472.27 crore from that of Tk 399.22 crore in the previous session with the increased selling pressure.
Of the 337 companies and mutual funds traded, 278 declined, 31 advanced and 26 remained unchanged.
Shariah index DSES shed 1.13 per cent, 15.99 points, to close at 1,398.47 points.
Olympic Industries led the turnover chart on the day with its shares worth Tk 28.44 crore changing hands.
Square Pharmaceuticals, LankaBangla Finance, Grameenphone, IFAD Autos, Paramount Textiles, Pharma Aid, City Bank, BRAC Bank and BD Thai were the other turnover leaders.
BD Online was the top gainer with a 3.87-per cent rise in its share prices, while Central Pharmaceuticals was the worst loser, shedding 7.42 per cent.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Stocks