Dhaka stocks dropped sharply on Sunday as investors intensified sales of shares of financial sector ahead of the dividend declarations and looming deadline for banks’ advanced-deposit ratio adjustment.
DSEX, the key index of Dhaka Stock Exchange, lost 0.82 per cent, or 48.18 points, to close at 5,763.73 points on Sunday after gaining 25.91 points in the previous session.
After a flat opening, the DSEX moved downward and continued to slide sharply as the day progressed as investors went into heavy selling of shares of financial sector —banks, non-bank financial institutions and insurance companies.
Market operators said that the general insurance sector was the worst loser of the day as some investors booked profit after a recent surge of the prices of this sector while some other investors, who purchased the shares at the peak of the prices, went into panic selling to offset losses.
Share prices of general insurance companies slumped by 5.1 per cent.
Investors also ditched shares of banks and NBFIs amid continuous negative news, related to loan scams and rising bad loans, coming out from the sector, they said.
Market operators said that investors were uncertain about the dividends which the banks and NBFIs would declare because of their poor financial management that led to rise in non-performing loans.
‘One of the key risks for non-performance of the banking sector from current price level might be linked to pick-up in deposit interest rates, which will hurt the NIM (net interest margin) and subsequently the profitability of the banks and NBFIs with poor balance sheet management and that includes corporate focused loan portfolios,’ said BRAC EPL Stock Brokerage in its daily market analysis.
It said that investors were also waiting to see the decision of Bangladesh Bank about the time extension for AD ratio adjustments that would end in March.
‘Bank and financial institutions sectors experienced price correction resulting from recent uncertainty and NPL issue,’ said EBL Securities in its daily market commentary.
Average share prices of banks and NBFIs plunged by 2.0 per cent and 1.5 per cent respectively.
Textile, telecommunication and cement sectors also dropped on the day.
On the other hand, the multinational companies including Grameenphone, British American Tobacco and Berger Paints continued to rise on investors’ expectation over their year-end dividends.
Some of the small capitalised companies, including, Monno Ceramics, Stylecraft and Pharma Aids advanced as the companies showed hefty profits in the half yearly (July-December, 2018) financial statement compared with that of the previous year.
The turnover on DSE increased to Tk 812.77 crore on Sunday compared with that of Tk 772.97 crore in the previous trading session.
Of the 336 companies and mutual funds traded on Sunday, 247 declined, 72 advanced and 29 remained unchanged.
DSE blue-chip index DS30 dropped 0.06 per cent, or 1.41 points, to close at 2,024.68 points.
Shariah index DSES shed 0.23 per cent, or 3.12 points, to finish at 1,320.28 points.
United Power Generation Company led the turnover leaders with its shares worth Tk 66.55 crore changing hands on the day.
Monno Ceramics, Fortune Shoes, Bangladesh Submarine Cable Company, Legacy Footwear, Genex Infosys, Monno Stafflers, Powergrid, Singer Bangladesh and Sonar Bangla Insurance were the other turnover leaders.
Fortune Shoes gained the most on the day with a 9.17-per cent increase in its share prices, while was the worst loser, shedding 9.81 per cent.
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