Stocks absorb profit-booking, floor shocks  

SUMMARY OF THE 66 SCRIPS

• 66 securities got rid of floor price on Thursday
• Among them, 63 were traded at the DSE
• 61 declined, 2 advanced
• 44 closed near bottom circuit

Following three consecutive days of sharp recovery, many investors tried to book some profits on Thursday, while the 66 scrips that came out of floor price restrictions on the same day faced a massive fall.

The two factors together stopped market recovery and pushed the major indices down again.

DSEX, the broad-based benchmark at the Dhaka Stock Exchange (DSE), fell by 82 points or 1.55% while it gained 250 points over the three preceding sessions, following a massive selloff on Sunday due to the announcement of a lockdown.

The Bangladesh Securities and Exchange Commission (BSEC) on Wednesday evening exempted 66 low or mid-cap scrips from complying with its floor price circular of 19 March 2020.

Over 100 scrips at the DSE were stuck at the floor price before the exemption took effect on Thursday.

Of the 66 scrips for which the floor price was lifted, only two managed to close in the green, three were not traded, and 61 closed down. Again, of 61 scrips, 44 closed 9-10% lower, indicating lack of buyer interest, pushing the scrips to near the bottom circuit breaker set for a single session.  

The sudden decision to lift floor-price restrictions on select stocks triggered investor pessimism in the market on Thursday, as they feared losing money in the scrips, said EBL Securities researchers.

Sharif Uddin, a retail investor, expressed frustration about the regulatory decision to waive the floor price requirement for the 66 scrips.

"It is a must at some point for artificial protection to go, but regulators seem to have picked a wrong time as the pandemic is hurting people more," said Sharif.

Mohsin Ali, another individual investor, said, "The BSEC hinted that the floor price system would remain there as long as the situation remains adverse, but I am surprised that the BSEC does not consider the time adverse for both the economy and the market."

On the other hand, Mamun, also a stock investor, welcomed the regulatory decision. He was annoyed with the floor as he was unable to sell two of his held scrips above the floor price. He is looking for buyers even at a lower price to free up his funds.

However, alongside the floor-price lifting pessimism, investors demonstrated their bearish sentiment through intensified sale orders in other scrips besides the 66.

Blue-chip index DS30 closed 1.03% lower, while Shariah-based DSES securities index fell by 1.39%.

The added impact of a free fall in the off-floor scrips resulted in a bigger fall in the broad index DSEX.

Of the 346 issues traded at the DSE, only 47 advanced, 264 declined, and 35 remained unchanged on Thursday.

"Investor participation was satisfactory," concluded EBL, since the DSE registered Tk476 crore in turnover inspite of shortened trading hours. However, trading turnover declined by 18.3% from the previous session.

No sector other than insurance was able to escape Thursday's contraction and only the general insurance sector added to its market capitalisation.

With the market chasing general insurance stocks aggressively since Monday, the sector accounted for over 40% of the daily trading turnover at the DSE on Thursday.  

Textile, travel and the leisure sectors absorbed the biggest fall of more than 5% each.

Port city bourse, Chittagong Stock Exchange, also witnessed a similar session,both in terms of a -fall in indices and also trading turnover.