DSE Weekly review
Dhaka stocks passed another bearish week with the turnover and benchmark general index of the bourse falling heavily as the nervous investors went for huge selling following volatility in the money market over liquidity shortage.
The average daily turnover at Dhaka Stock Exchange fell by 32.24 per cent in the past week while the general index slumped by 4.36 per cent after the market went into bearish trend in the previous week following 11weeks of bull run.
‘Usually, the market slows down in December as institutional investors like banks and financial institutes go for heavy selling to adjust their finances before the year-end closing. But in the past week volatility in the money market also hit the stock exchanges,’ said a stockbroker.
He said that the inflow of liquidity from the banking sector was squeezed in the week even after the Securities and Exchange Commission raised the margin loan for the investors.
Inter-bank call money rate or interest rate soared to 175 per cent in the past week as banks and non-banking financial institutes faced huge pressure to accumulate cash from banks, especially from nationalised commercial banks and NBFIs which had excess money, to fulfil a Bangladesh Bank directive to increase their statutory liquidity ratio and cash reserve ratio by December 15.
The central bank earlier directed the banks and the NBFIs to increase SLR to 19 per cent from 18.5 per cent and cash-reserve ratio, or CRR, to 6 per cent from 5.5 per cent apparently to control the banks and NBFIs from investing heavily in the stock markets.
‘As the banks faced difficulties in increasing CRR because of liquidity shortage, their merchant banking wings squeezed pumping money into stock market in the week. Moreover, many of the banks had sold off stocks from their possession to accumulate funds,’ said another stockbroker.
He said that the market had been recovering from a record slump of 284.78 points on Sunday before the money market volatility hit the market in Monday-Wednesday. Market was closed on Thursday on occasion of Victory Day.
Sunday’s fall was the highest single day fall since the infamous 1996 fall of DSE.
The SEC tried to bring the market back on track by increasing the margin loan ratio to 1:1 from the 1:0.5. ‘But, the SEC move proved to be inadequate because of turmoil in money market,’ said the stockbroker.
The daily average turnover, which had gone up to Tk 3,200 crore, stood at Tk 1, 572.46 crore in the past week, down by Tk 748.15 crore from the previous week’s turnover of Tk 2,320.61 crore.
The benchmark general index of DSE fell 374.03 points, or 4.36 per cent, to close at 8206.17 points on the week.
The DSE general index had lost 257.90 points on the previous week after a 10-week bull run.
Prices of shares of almost all categories fell in the past week as 204 issues, out of 246 traded, fell while only 40 advanced and 2 remained unchanged.
UCBL topped the week’s turnover leader with a total transaction of Tk 232 crore. The price of UCBL shares fell by 3.42 per cent.
Other top 10 turnover leaders including Beximco Ltd, Aftab Automobiles, Bay Leasing and Investment Ltd, Shinepukur Ceramics Limited, AB Bank, NBL, Titas Gas, Lankabangla Finance and Southeast Bank.
