Banking stocks in freefall
Economy
Bank stocks have been under pressure in the recent trading sessions of both Dhaka and Chittagong stock exchanges, as investors fear that the much talked about single-digit lending rate will eat away profit of banks.
A total of 25 banks closed the session on Sunday in negative territory, while only three closed in the green zone and two remained unchanged out of the 30 listed banks.
Confidence among investors on financial stocks has weakened because of the recent rise in non-performing loans, brokers told The Business Standard. Many expressed concerns over the single-digit lending rate eroding their profitability in the coming years.
The banking sector's share price correction has resulted from concerns over the government move to stabilise interest rate and soaring provision for bad loans, mentioned the Daily Market Review of EBL Securities Ltd.
The market capitalisation of the banking sector declined 4 percent from Tk52,247 crore to Tk50,164 crore since the start of new year, according to the Daily Stock Market Report of LankaBangla Securities Ltd.
Banking sector contributed 15 percent to the total turnover of Tk292 crore in Dhaka Stock Exchange, while the highest sector contribution of 17 percent was made by engineering stocks, the report added. Total turnover in the session declined by a quarter, down from Tk386 crore in the previous session.
The benchmark index of Dhaka Stock Exchange, DSEX lost 59 points or 1.3 percent to close at 4,400 points while CASPI, the key index at the Chittagong Stock Exchange declined 163 points or 1.2 percent to settle at 13,382 points.
Sector specific returns were mostly negative during the session. Among prominent sectors, food and allied registered the highest gain of 0.06 percent, while textile stocks lost a staggering 2.4 percent, showed the LankaBangla Securities report.
The Khulna Power Company Ltd led the turnover table with Tk19.1 crore turnover value, closing at Tk53.1 per share. SS Steel Ltd topped the gainers' table with a gain of 6.8 percent while Generation Next Fashions Ltd turned out to be the worst loser, giving up 7.1 percent by the end of the session.
Out of 354 issues traded, 52 advanced, 269 declined and 33 remained unchanged at the Dhaka Stock Exchange on Sunday.
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