Dhaka stocks on Sunday declined sharply as many of the investors, dejected by some of the measures including imposition of capital gain tax in the proposed budget, went into a selling spree. The key index of the Dhaka Stock Exchange, DSEX, declined to a five-month low at 4,346.33 points, shedding 1.14 per cent or 50.20 points on Sunday, the first trading session after the announcement of budget by finance minister AMA Muhith on Thursday.
The earlier low was on January 7 this year when the DSEX was at 4,330.63 points.
The government in the proposed finance bill imposed 3 per cent taxes on the individuals with more than Tk 10 lakh capital gain in a year, while the gain tax will be 5 per cent if an individual earns more than Tk 20 lakh a year.
The market on the day started with a significant decline in share prices as many of the investors pushed panic button by going into wholesale sell-offs over the budgetary measures, market operators said.
Within the mid trading session of the day the DSEX lost 96 points to 4,300 points due to investors’ panicky share sell-offs.
The market afterward recovered some ground following a rumor that the government might consider withdrawing the newly imposed taxes over the individual investors when the budget will be passed in late June, market operators said.
National Board of Revenue officials, however, told New Age that there was no move from the government about withdrawing the capital gain tax till Sunday.
‘The stock market had been on a roller-coaster ride before the budget as the DSEX fell for four sessions before Sunday. The budgetary measures hit the market hard as investors who are yet to recover from the market crash in 2010-2011 disapproved the capital gain tax,’ said a stock broker.
Besides, investors had expected that the government would cut corporate tax for listed companies but in the proposed budget it only reduced corporate tax for non-listed companies, he said.
Capital market regulator also admitted the impact to budget over the capital market on Sunday.
A BSEC senior official told New Age that investors became panicky as the government imposed new tax burden over the investors in the proposed
finance bill which dejected investors.
‘Over expectational mismatch on the latest National Budget FY 2014-15 and Finance Bill 2014, the bourse took a hit, today [Sunday],’ IDLC Investments said in its daily market commentary.
‘A few proposals, particularly capital gain tax, affected market sentiment strongly,’ it said.
‘Investors became disheartened as they did not get any incentives in the proposed budget except new burden in the form of taxes on individual investors,’ said Chittagong Stock Exchange former president Fakhruddin Ali Ahmed.
To restore investors confidence over the market, the government should reconsider about imposition of taxes, he said.
DS30, the blue-chip index of the bourse, slipped by 1.39 per cent, or 22.64 points, to close at 1,600.30 points on the day.
DSES, the shariah index of the bourse, fell by 1.07 per cent, or 10.82 points, to finish at 996.99 points.
Of the 289 shares and mutual funds traded on the day, 86 advanced, 176 declined and 27 remained unchanged.
Lafarge Surma Cement traded the most on the day as its shares worth Tk 50.24 crore changed hands.
Despite slide in the market, the controversial Wata Chemicals was among the top ten gainers of the day as its share prices increased by 7.59 per cent.
The Bangladesh Securities and Exchange Commission on Tuesday formed a committee to investigate abnormal rise in the share prices of the company.
Samata Leather Complex declined the most on the day as its share prices declined by 7.16 per cent.
-With New Age input
