Stocks drop but escape plunge on floor price mechanism

Dhaka stocks dropped moderately on Sunday as the newly introduced floor prices saved the market from a plunge despite massive sale orders placed by investors due to fears over the coronavirus outbreak and lack of buyers.

DSEX, the key index of Dhaka Stock Exchange, lost 0.37 per cent, or 14.79 points, to close at 3,960.17 points on the day after gaining 371.01 points in the previous day.

The index had jumped on March 19 as the Bangladesh Securities and Exchange Commission on the day set the floor prices for all equities to halt free fall over concerns over the coronavirus pandemic.

Under the mechanism, the prices of the companies’ shares could not fall below a certain level.

The trading at the DSE started at 10.30pm and continued till 1.30pm on Sunday as the bourse has cut the trading period by one hour due to the coronavirus outbreak.

Before the jump on March 19, the DSEX had lost 627 points in four sessions.

The key index started falling from the beginning of the day and continued the sluggish vibe until the end of the session as the regulatory ceiling on price fall kept away traders from sales, causing the shares of most of the companies being traded at the floor prices, market operators said.

They said that from the very beginning on the day, there was barely any buyer of shares of any equities and the regulatory ceiling saved the market from another catastrophic day.

The DSE had made mistakes in calculating the floor prices of most of the equities on March 19 and the mistakes were corrected on Sunday by raising the floor prices of a number of companies that also saved the market from a bigger fall.

The number of coronavirus-infected people in the country is rising every day, raising concerns.

The Institute of Epidemiology Disease Control and Research on Sunday confirmed that the novel coronavirus had so far infected 27 people and killed two in Bangladesh.

Fearing community transmission, the government on Saturday locked down the Tolarbagh neighbourhood of Mirpur Darussalam in the capital and Shibchar upazila in Madaripur district on March 19, and suggested people across the country to stay at home.

The business activities in the country became limited amid various restrictions and fear of contagion.

About 3.07 lakh people across the world have been infected with the deadly virus and 13,000 deaths were reported globally till Sunday.

Former BSEC chairman Mirza Azizul Islam told that due to the ceiling on price fall, trading activities slowed on the day amid fears of coronavirus.

He said that the market would gradually improve when investors would realise that share prices of companies couldn’t fall below the floor prices.

Mirza Aziz also said that investors should buy shares now to maximise their gains.

EBL Securities in its daily market commentary said that the Dhaka bourse traded stocks under the new circuit breaker rules for the second day on Sunday, which ensured the market remained afloat.

‘Some investors have engaged in profit booking capitalising on a 371-point gain in the last trading day. Also, investors are also engaged in selling off to avoid further losses,’ it said.

The turnover on the DSE totalled at Tk 145.83 crore on Sunday compared with that of Tk 49.12 crore in the previous trading session.

Share prices of engineering, energy and textile dropped by 2.2 per cent, 1.7 per cent and 0.4 per cent respectively.

Of the 356 scrips traded on the bourse on Sunday, 209 declined, 25 advanced and 113 remained unchanged.

DSE blue-chip index DS30 dropped by 0.31 per cent, or 4.21 points, to close at 1,321.59 points on the day.

Shariah index DSES also dipped by 0.36 per cent, or 2.76 points, to end at 916.67 points.

Monno Ceramics led the turnover chart with its shares worth Tk 17.09 crore changing hands on the day.

Square Pharmaceuticals, JMI Syringe, Bank Asia, Aziz Pipes, Monno Jute Stafflers, Mercantile Bank, Kay & Que, Dutch-Bangla Bank and Premier Bank were the other turnover leaders.

EXIM Bank 1st Mutual Fund gained the most on the day with a 17.14-per cent increase in its share prices while Bangladesh Steel Re-Rolling Mills fared the worst, dropping 9.88 per cent.Report New Age.