Stocks slide after two-day rally
Stocks snapped out of their gaining momentum as worries over macroeconomic factors as well as floor price mechanism once again weakened the confidence of investors and they opted for booking profits from the recently rallied scrips.
DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), dropped 34 points or 0.55% to close at 6,197 on Monday, compared to the previous trading session. The blue-chip index DS30 also declined by 10 points to close at 2,191.
Turnover at the Dhaka bourse rose by 23% to Tk416 crore on Monday, compared to the previous trading session.
On the day, only ten scrips advanced, while 73 declined and 206 remained unchanged on the DSE trading floor.
Currently, 319 out of 390 scrips are stuck at floor prices.
Abu Ahmed, a former economics professor at the University of Dhaka and stock market analyst, told The Business Standard, "Share prices are expected to fall in the current economic situation. But the floor price mechanism is not letting that happen and is disrupting the market balance as big investors, despite having money, are staying on the sidelines."
So he opined in favour of removing the floor price from the stock market.
According to the daily market commentary by EBL Securities on Monday, investors preferred to remain on the sidelines as their willingness to take long-term positions in equities has weakened as a result of the poor financial performance of the major companies, and current macroeconomic adversities.
Moreover, most scrips being disregarded at the floor price have limited liquidation opportunities in the market, creating an impediment for investor participation to rebound across the bourse, the review added.
Investors were mostly active in IT, paper, pharmaceuticals, and life insurance stocks as half of the DSE turnover was contributed by these four sectors.
