Dhaka stocks on Sunday crash-landed, stretching the rout to the fourth day, as panicked investors continued selling shares amid the political worries surrounding a court verdict scheduled to be announced on Thursday in a graft case against BNP chairperson Khaleda Zia.
The main index of Dhaka Stock Exchange, DSEX, plummeted by 133 points, or 2.21 per cent, on Sunday hitting a six-month low at 5,888 points, which prompted key market stakeholders to hold again an emergency meeting in the evening.
The market lost Tk 6,400 crore in value on the day as the DSEX’s slump on the day was highest since June 9, 2013 when the index fell by 145 points.
The DSEX shed 288 points in last four sessions.
Market operators said selling pressure by investors escalated on Sunday after sustained sales in the previous three sessions over the political worries and Bangladesh Bank’s decision to cut the banks’ loan-deposit ratio.
They said that panic among investors mounted on Sunday fearing further losses following a BNP executive committee meeting on Saturday.
As the media reported on Sunday that Bangladesh Nationalist Party would go for ‘tough movement’ if Khaleda was sent to jail while ruling Awami League had also made preparations to counter the movement, investors feared the political confrontations would weigh on the country’s economy and the capital market.
At the BNP meeting, Khaleda accused that the lower judiciary was under the ‘grip’ of the government and that she would not get fair verdict in the corruption case.
Police have detained hundreds of BNP activists and leaders, including some senior leaders, ahead of the verdict to be announced by a special court.
Market operators said that investors were apprehensive that a long spell of political uncertainty would hit the country as it is an election year.
They said that the Bangladesh Bank’s decision to cut banks’ advance-deposit ratio also haunted investors, particularly institutional ones, as they also went for sell-offs to save their funds from losses at a bear market.
Bankers said that the BB move to cut ADR by 1-1.5 percentage points would create a liquidity crisis at the financial market, leading to a rise in the interest rates as banks would begin a race for deposit collection.
Key market players, including DSE Brokers Association and Bangladesh Merchant Banks Association, last week held a joint emergency press conference to calm the investors’ nerve saying that the market was falling because of rumours.
DBA and BMBA and top 30 brokerage houses of the DSE held an emergency meeting on Sunday afternoon to find a solution to the market slump.
After the meeting, DBA president Mustaque Ahmed Sadeque said that investors were becoming panicky after seeing the media reports on the political situation.
‘There is nothing to be worried about the political situation as the situation is not unstable yet and the verdict [against Khaldea Zia] has not yet announced,’ he told reporters, when he was asked whether political worries were affecting stocks.
‘In the past, when the political situation was grave, it did not affect the stocks like the way it is affecting now,’ he said.
Mustaque said the rumours surrounding the ADR cut were also wrong. ‘It was an old issue and the BB cut ADR much less than it was previously reported,’ he said.
BMBA president Nasir Uddin Chowdhury said that the capability of Investment Corporation of Bangladesh to intervene into the market in such a situation was affected because of the Bangladesh Bank’s pressure to cut the ICB’s exposure to the capital market.
He said that they would request the BB to calculate the exposure of banks and their arms to the capital market on cost-price basis instead of market-price basis and to keep out bonds and debentures from exposure calculation.
Out of 337 companies and mutual funds traded on Sunday, 302 declined, 23 advanced and 11 remained unchanged.
The share prices of all the sectors declined while the fall in share prices of non-bank financial institutions and bank by 3.9 per cent and 3.2 per cent respectively weighed most on the index.
The share prices of cement, pharmaceuticals and energy also plunged on the day.
Among the prominent scrips, Grameenphone, BRAC Bank and City Bank declined most on Sunday.
The turnover at the bourse, however, increased to Tk 364.90 crore from that of Tk 329.45 crore in the previous session.
‘The continued fall of the index has been triggered by the liquidity crisis persisting in the market and moderate political tension surrounding the upcoming election,’ said EBL Securities in its daily market commentary.
DS30, the blue-chip index of the DSE, also lost 1.63 per cent, or 36.33 points, to close at 2,191.58 points.
Shariah index DSES shed 1.42 per cent, 19.84 points, to close at 1,377.21 points.
National Bank led the turnover chart on the day with its shares worth Tk 17.21 crore changing hands.
LankaBangla Finance, Square Pharmaceuticals, Beximco Pharmaceuticals, Alif Industries, Monno Ceramics, City Bank, BRAC Bank, Usmania Glass Sheet Factory and IFAD Autos were the other turnover leaders.
Berger Paints Bangladesh was the top gainer with a 4.86-per cent rise in its share prices, while MIDAS Finance was the worst loser, shedding 7.99 per cent.
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