The stockmarket passed a dramatic last week with an unprecedented upheaval in the premier bourse’s key index in the history of Motijheel financial district.
The main gauge of Dhaka Stock Exchange touched the highest ever level of 8,918 points on the opening session of the week, but dropped like a stone by 547 points within 75 minutes of the start of trading just two days later, labelling a ‘black Wednesday’ in the stockmarket history.
Appalled, the investors went to the Motijheel street with procession, ransacked vehicles and chanted slogans against the top brass of the regulator and the bourse.
The market, however, recovered most of the losses on the same day, after the regulator reversed its couple of directives, which the investors blamed for the intra-day crash.
Week-on-week, the DSE General Index (DGEN) declined 258 points, or 2.92 percent, to 8,580 — marking the end to an 11-week bull run.
Analysts see the regulatory intervention as the main reasons behind the black Wednesday and the week’s downtrend.
The unprecedented fall of Wednesday was resulted by a regulatory directive, which squeezed ‘netting facilities’, stopping investors from buying new shares with funds from another share sale that was ordered but not finalised.
Another directive on executing buy orders only after cashing an investor’s cheque also stung the market in the prior two days of Wednesday.
“The bull run ended on Monday, when two consecutive directives came from Securities and Exchange Commission (SEC) that pushed the market towards a decline,” according to BRAC-EPL, an investment firm.
“Several other factors might have helped trigger this correction; one of which may be the high call money rate (at around 30 percent) which means that the financial institutions were having liquidity problems. It is speculated that the financial institutions were offloading their holdings in order to cover their liquidity needs,” BRAC-EPL said in its weekly market analysis.
LankaBangla Securities, a leading stockbroker, also mentioned similar reasons behind the last week’s fall.
It further said the fall of 547 points indicates how severe the slide can be if the market runs continuously without fundamentals. “In the previous two months, the DGEN added 1,505 points mainly driven by the excess liquidity and over enthusiasm of the naive investors who forgot the downside of the bull market.”
Apart from the reversal of two of its directives, the SEC also formed a four-member inquiry committee to probe the Wednesday’s unprecedented fall.
The DGEN, however, closed higher on Thursday, the last trading day of the week, as the investors went for fresh buy in anticipation of a bullish trend from the beginning of this week.
Although the single-day turnover reached a new high of Tk 3,249 crore on December 5, the total and daily average turnover declined by 6.72 percent to Tk 11,603 crore and Tk 2,320 crore respectively.
Losers beat advancers 176 to 72 on the prime bourse, which traded more than 54.85 crore shares and mutual fund units.
Market capitalisation stood at Tk 3,57,940 crore, down by 2.35 percent, week-on-week.
Chittagong stocks also saw a sharp fall last week, with the CSE Selective Categories Index declining 3.34 percent to 15,583 points.
More than 7.08 crore shares and mutual fund units were traded on the Chittagong Stock Exchange on a value of Tk 1,293 crore.
Losers beat gainers 145 to 63,
with four securities remaining unchanged on the port city bourse.
