Market to open with new circuit breaker

The stock market extended its losses last week but thanks to regulator intervention, indices recovered abruptly on Thursday amid new circuit breakers.

The Bangladesh Securities and Exchange Commission (BSEC) introduced a new circuit breaker rule and set a floor price for every stock to keep the market buoyant. 

The new emergency circuit breaker rule was set so that the prices of securities do not go below their average prices from the previous five sessions – from March 19. The benchmark index of the Dhaka Stock Exchange, DSEX, gained more than 10 percent during the last trading session, which was only 30 minutes long.

The DSEX dropped 155 points – or 3.8 percent – during the week to close at 3,975.

CASPI, the benchmark index of the Chittagong Stock Exchange, plunged a staggering 1,680 points – or 13.3 percent – over the week to close at 10,963.

According to the Weekly Market Review of UCB Capital Management Ltd, investors displayed a frenzied selling attitude after Covid-19 was declared a pandemic in the country.

The market witnessed three negative sessions and one positive session during the week.

On March 15, the market faced a negative session because of coronavirus fears among investors, as global stocks took a nosedive because of the pandemic. Covid-19 has also affected remittance flows, one of Bangladesh's important economic indicators.

The market extended its losses for the rest of the sessions during the week over virus fears. On March 18, the main index jumped over 106 points – within five minutes of trading – on the news of banks' investment in the market. However, they could not keep up the pace as investors kept selling shares to avoid losses – fearing the likelihood of an economic lockdown, stated the market review of EBL Securities Ltd. 

However, on March 19, the last trading session of the week, indices recovered because of the securities regulator's new circuit breaker rule.

Trading remained low during the week, and the average turnover stood at Tk314.6 crore – down 25 percent from the previous week's Tk417.7 crore.

In weekly average turnover distribution, the pharmaceuticals sector contributed the highest – 19.6 percent – to turnover, followed by engineering which added 11.2 percent and textiles which added nine percent.

All the sectors posted weekly losses except for tanneries which exhibited price appreciation of 0.5 percent. The food sector exhibited the highest price correction of seven percent during the week.

Among large-cap sectors: financial institutions lost 6.5 percent, telecoms lost 5.1 percent, pharmaceuticals gave up 3.9 percent, and banks slid 2.9 percent on the weekly sector return board.

Square Pharmaceuticals Ltd was the most-traded stock of the week with a closing price of Tk170.4 per share. Its weekly turnover was Tk63.3 crore, according to the DSE website.

Khan Brothers PP Woven Bag Industries Ltd topped the weekly gainers' table by gaining 7.9 percent, closing at Tk6.8 per share. Bangladesh Industrial Fin Co Ltd, on the other hand, was the week's worst loser as it dropped 28.6 percent and closed at Tk2 per share.