Dhaka stocks gained heavily for the second day on Tuesday, recovering most of the ground the market had lost in its highest single-day fall on Sunday.
Market operators said investors had continued buying spree to avail lower prices of securities after Sunday’s massive fall and subsequent withdrawal of some stringent regulatory measures by the Securities and Exchange Commission and the Bangladesh Bank.
The benchmark general index of Dhaka Stock Exchange gained 209.47 points, or 2.63 per cent, to close at 8,168.74 points on Tuesday. The general index advanced by 514 point in last two days as it gained 304.87 points on Sunday.
The index shed 551 points on Sunday because of a heavy selling pressure fuelled by the volatility in the money market and other stringent regulatory measures taken by the SEC.
‘The market have maintained gain today [Tuesday] as the SEC has made the market “open” by withdrawing stringent measures. Investors have now jumped on the bandwagon to buy shares as the market is rallying upward,’ DSE president Shakil Rizvi told New Age.
He observed that when the prices of shares dropped on and before Sunday, investors went for selling of stocks. ‘They [investors] are now buying high priced shares, although it should have been opposite,’ he said.
Following the huge fall in share prices and violent protests of the investors on Sunday, the SEC increased the margin loan ratio and changed three more decisions in a bid to stop further fall in the stock prices.
The SEC raised the margin loan ratio to 1:1.5 from 1:1, suspended the net asset value-based margin loan calculation system, sent shares of Grameenphone and Marico Bangladesh from the spot market to the regular market and postponed its earlier decision about the members’ margin which was set to be effective from January 2.
Besides, the Bangladesh Bank extended the deadline from January 31 to February 15 for the banks to adjust the industrial loans that they had disbursed but were invested in other sectors to give the banks more time to have their borrowers disinvest such funds from the capital market.
The central bank also decided to defer another deadline for banks to furnish it with the details of clients who took loans of more than Tk 1 crore from December 31 to January 15.
Market operators said the announcement made by the SEC on Monday that it would not change its directives repeatedly also encouraged investors to go for buying spree.
The heavyweight Grameenphone, which was placed in the regular market, continued to dominate the market on Tuesday as its share prices soared again by 14.45 per cent to Tk 285.90 after a 17.50-per cent price hike on Monday. GP was the turnover leader with 74,92,600 shares valued at Tk 209.50 crore were traded on the day.
Market operators said the market capitalisation, which came down to Tk 3, 26,087 crore on Sunday, soared to Tk 3,51,2849 crore on Tuesday led by the GP shares.
Out of 244 issues traded on the day, 172 advanced, 69 declined and three remained unchanged.
Although stock prices gained and turnover increased by Tk 224 crore on Tuesday from Monday’s Tk 1,459 crore, investors alleged that brokerage houses and merchant banks were still hesitant in providing loans to investors at a ratio of 1:1.5.
Stockbrokers and merchant bankers, however, said that they were facing liquidity shortage in giving loans to investors at maximum level because of cash crunch in banking sector.
‘Because of shortage of cash, the call money rate at the money market was hovering around 50 per cent whereas stock investors get loan at an interest rate of around 13-15 per cent. So it is difficult to accumulate funds from the money market because of higher call money rate,’ said Shakil.
Bangladesh Merchant Bankers Association president Arif Khan also said that it was not possible to bring money from the money market with higher interest rate to give loans to investors. ‘Once the money market becomes stable, we will be able to give investors loan at maximum rate,’ he said.
