Wednesday, April 17, 2024

Stocks plunge as investors disapprove budgetary steps

Dhaka stocks on Sunday plunged by more than 3.5 per cent as the investors reacted negatively to the budgetary measures, including scraping of the option to legalise
undisclosed money in the market by paying only 10 per cent tax.
The benchmark general index of the Dhaka Stock Exchange, DSEX, lost 145.31 points or 3.6 per cent to close at 3,882.81 points on the day, the first trading session after finance minister AMA Muhith had announced the budget for the next fiscal year 2013-2014 on Thursday.
Muhith announced a package for the stock market in the budget that proposed increasing the limit of tax-free dividend income to Tk 10,000 from Tk 5,000 crore, but the scope for legalising undisclosed money in stocks by paying 10 per cent tax was scrapped.
The minister in his budget speech did not mention about it, but the finance bill for the next fiscal year showed that the provision of legalising money by paying only 10 per cent tax was only given to the housing sector.
Market operators said that many of the investors, disheartened by the budgetary measures, went for heavy selling as soon as the trading began on Sunday and the market never returned to the positive zone for the rest of the day.
They said that the finance minister’s announcement that the government would continue taking contractionary monetary measures by squeezing money supply to curb inflation also made the investors nervous.
‘Scrapping the scope to legalise undisclosed money hardly has any impact on the market or its turnover. The scope was there during the last two years, but not much money was invested in the market. But, it is a psychological matter for some investors who think such facility boosts the market,’ said a stockbroker.
The DSE and different investors forums’ demand for Tk 5,000 crore was not met in the proposed budget, which dejected the investors, he said.
The turnover of the bourse declined to Tk 431.74 crore, slipping 31.65 per cent from the earlier trading session’s Tk 631.63 crore.
The contribution of undisclosed money to stabilising the stock market was never a significant one. It only had a physiological effect, DSE president Rakibur Rahman said at a post-budget press briefing on the day.
Referring to the undisclosed money issue, Rakibur said there had been rumours in the market, but the investors had to understand that capital market won’t depend on a single tool.
Hailing the proposed budget, the DSE president said the budget for the financial year 2013-14 was a reflection of the government’s positive attitude towards the capital market.
‘This is the most important thing we need to develop the capital market,’ he observed.
The old benchmark key index of the bourse, DGEN, lost 3.88 per cent, or 167.14 points, to finish at 4,133.60 points on the day.
The DGEN has now lost 177.02 points in the last two trading sessions after gaining 415.61 points in the earlier eight.
The budget is not the only reason for the free fall of the market, Union Capital chief executive officer Akter Hossain Sannamat told New Age, adding that some negative comments made by experts puzzled the investors, which was the main reason behind the market fall.
The government’s decision to scrap the scope of whitening undisclosed money in the capital market might deject some investors, but the investors have to understand that our market was never a block money-based one, Sannamat said.
The blue chip index of the DSE, DS30, declined to 1,443.90 points on the day, shedding 3.78 per cent or 56.82 points.
The DS30 has now lost 54.99 points in the last two trading sessions after gaining 140.31 points in the earlier eight.
Of the 281 issues traded on the day, 19 advanced, 256 declined and 6 remained unchanged.
Unique Hotel led the turnover chart on the day as its shares worth Tk 26.66 crore changed hands.
National Housing Finance led the gainers’ list as its shares went up by 9.92 per cent, while Jute Spinners lost the most by 9.84 per cent.

-With New Age input

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