Market nosedives amid fear of bottom circuit normalisation
BSEC rejected the rumour of widening the bottom circuit to 10% soon
Stocks again nosedived on Sunday to nip the recovery efforts in the bud amid a rumour that the market regulator might bring back the 10% limit for individual stocks to fall in a day.
Professor Shaikh Shamsuddin Ahmed, commissioner of the Bangladesh Securities and Exchange Commission (BSEC), however, told The Business Standard that the regulator has no plan to opt out of the narrowed bottom circuit that is not allowing any stock to fall by more than 2% a day.
Against the backdrop of free-fall of stocks in the wake of the Russia-Ukraine war that is further fuelling global commodity prices and threatening higher inflation locally, the BSEC in the second week of March interfered with narrowing the bottom circuit breaker and it worked in conjunction with some other moves to create demand for stocks.
DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), dropped to 6,318 on 8 March, from the recent peak of 7,118 on 14 February.
Regulatory interventions attracted bargain hunters who helped the index recover up to 6,780 levels last week.
The index fell by 0.99% to 6,698 on Sunday as 339 DSE scrips declined against the advance of only 23. Too many stocks were stuck at the bottom circuit of 2% and some were trading near the level.
BSEC Commissioner Shamsuddin said his commission would pull out the special measure only after the market gets its strength back.
"Just like before, we would repeal it when the restriction would not remain relevant anymore."
Earlier, in March 2020, the BSEC imposed a floor price for individual scrips and held it tight, despite much criticism by the free-market believers, until mid-2021, when the DSE secured a bull market.