Dhaka stocks on Tuesday made a dramatic turnaround on the finance minister’s remark that the capital market would be stabilised this very week and some institutional investors’ re-entry into the market, analysts said.
Heavy buying of shares by different government agencies like the Investment Corporation of Bangladesh and a handsome dividend declared by a bank also led to the day’s rally, they added.
After three days of deep plunges, the general index of Dhaka Stock Exchange rose by a whooping 428.23 points on Tuesday because of a late rally in share prices, although the index had fallen by around 104 point by midday.
The market began the day upbeat and the DSE general index, which had lost 406 points on Sunday and 324 points on Monday, rose by around 240 points in just 15 minutes of trading. But, heavy sell-offs by some panic-stricken investors had pushed down the market by midday and angry investors took to the streets for the third day protesting at the share-price slide.
The market, however, started to rebound as the news broke that finance minister Abul Maal Abdul Muhith told reporters at the Secretariat that the share market would be stabilised in this week.
Besides, some institutional investors, who had remained inactive for the past few weeks, started to buy shares as the prices came down to their desired level following the last few days of bear run, said analysts.
Some stockbrokers, however, were puzzled by the dramatic turnaround, in which the DSE general index gained around 400 points in the last 80 minutes of trading.
‘The government moved on Tuesday to save the market. The government did not want that the market collapse and investors continued to demonstrate on the street ahead of the Cricket World Cup,’ said Salahuddin Ahmed Khan, a professor of finance at Dhaka University.
He said a government organisation purchased a huge quantity of shares on the day to stabilise the market.
Share market analyst Akter H Sannamat said the market rebounded on Tuesday after some institutional investors had re-entered it. ‘They became active after getting the government assurance that the market would be stabilised.’
LR Global Asset Management chief executive officer Reaz Islam said institutional investors returned to the market as they found the share prices had come down to a ‘lucrative level’.
He, however, said the late rally on the day was unexpected. ‘But, investors went for heavy buying, finding the share prices reasonable.’
An official of a brokerage house said the NBL’s dividend declaration also sparked heavy buying, especially of the bank issues.
‘There has been apprehension that banks would not be able to give good dividends to investors as their profits made in the share market will not be allowed to be disbursed to the shareholders. But the NBL’s declaration of 95 per cent stock dividend gave investors the hope that other banks would come up with similar good dividends,’ he said.
A stockbroker at Motijheel, however, said he was ‘puzzled’ by the late rally. ‘I am still confused why the market went up by 400 points in one hour,’ he said.
