The general index of Dhaka Stock Exchange on Tuesday gained by a record 1,012.66 points as investors went for a buying spree following the moves of Bangladesh Bank and the Securities and Exchange Commission to halt the massive slides.
The general index of DSE gained by15.58 per cent to close at 7,512.09 points on Tuesday after it lost 1,829 points in previous six trading days.
The DSE general index had lost 660 points within 50 minutes on Monday. The SEC stopped the trading when the index dropped heavily as the investors went for heavy selling followed the credit crunch in banks and non-bank financial institutions.
Investors staged demon- stration on Monday after the SEC stopped trading to rein in the falling DSE general index.
The Bangladesh Bank and Securities and Exchange Commission urgently arranged meetings with the managing directors of commercial banks and merchant banks to discuss how to stop collapse of the capital market following the directives from the government on Monday.
The general index of DSE swelled to 8900 on December 5. It is the highest record in the history of DSE. The general index began falling as the banks and non-bank financial institutions faced credit crunch following the stringent measures and strong monitoring system by central bank. The general index of DSE plunged 551 points on December 19.
After the record fall on Monday, Bangladesh Bank asked the commercial banks to invest largely in the capital market. The SEC increased the margin loan ratio to 1:2 from 1:1.50. The SEC also decided that investors would get netting facilities for the trading of all securities. The SEC also postponed a provision that bars merchant banks from providing loans to the investors that are worth more than five times the equity of the banks.
Market analysts said that it was an unusual gain on Tuesday after a big fall on the previous day and the rising trend of the market would not sustain if the central bank fails to increase credit inflow into the market.
‘Most of the institutional investors went for massive buying of shares and small investors also went for buying shares with confidence on the day,’ said a market observer.
Prof Mahmud Osman Imam, who teaches finance at the Dhaka University, said, ‘It is not a positive behaviour for a capital market because the central bank permitted the commercial banks to invest their highest limit and the SEC issued new measures to stop collapse of the market following directives from the government.’
‘Price of some low profile companies increased unusually on the day because some manipulators took the chance,’ he added.
Most of the small investors alleged that merchant banks failed to give margin loan to the investors at the ratio of 1:2.
Few merchant banks gave loans to the investors at a ratio of 1:1 as they faced credit crisis, said a merchant banker.
The investors vandalised some brokerage houses as they failed to give the loan at the maximum limit of margin loan.
Akter H Sannamat, managing director of Prime Finance and Investment, said, ‘Most of the merchant banks failed to give the maximum limit of margin loan as the parent companies failed to supply fund for the subsidiary companies on the day.’
‘The gaining drift of the market is unusual and it is not positive for a capital market. The confidence of small investors grows up quickly on the current market as the central bank and the SEC issued different directives on Monday,’ he added.
Out of the total 248 issues traded on the DSE on Tuesday, 243 advanced and five declined.
Share prices of almost all the issues of major sectors like bank, insurance companies, fuel and energy, non-banking financial institutions, textiles, engineering and telecommunications, and mutual funds gained on the day.
The daily turnover at the DSE stood at Tk 977.14 crore, up by Tk 576.82 crore from the previous day’s trading.
Beximco topped the turnover leaders of the day with 26.40 lakh shares worth Tk 82.46 crore.
The rest of the other turnover leaders were NBL, GP, Bextex, Titas Gas, LankaBangla Finance, Prime Bank, Pubali Bank, Social Islami Bank and Islami Bank.
AIBL First Islamic Mutual Fund was the biggest gainer of the day, posting 77.65 per cent rise its share price, while the Jute Spinners was the worst loser.
