Panic bites stock market

The stock market is suffering a classic bear bite as panic over its future direction has been on the rise.

Over the last 25 trading sessions since the national budget proposal on June 13, DSEX – the country’s benchmark stock index – lost 440 points, a fall by 8.05 percent.

During this time, indices with lows kept breaking psychological support levels of investors, and Sunday appeared as the dooms day for them.

On the opening day of the week, DSEX lost 96.95 points, or 1.89 percent over the previous session, the sharpest fall since February 4 last year.

At the end of the session, the core index of the Dhaka Stock Exchange (DSE) came down to 5033.75, hitting a 31-month low. The market nosedived until the closing bell.

There were a series of protests in front of the DSE Building in Motijheel by individual investors who lost money in stocks.

They demanded trial of those who manipulate stock prices and helped them from different responsible positions.

A fear of forced sell-off from margin accounts

A number of investors, who bought shares or mutual fund units with borrowed money from brokers, are now facing a forced sell-off in a fear that the brokers might attempt to recover their own money from clients’ accounts.

“It might ignite a fresh round of sell-off, if prices keep falling like this,” said a top stock broker seeking anonymity.

Only a strong positive disruption can help the investors, he added.

No saviour in sight

During an extreme sell-off in the market, government funds usually tend to come up as rescue forces.

But the government did not come forward with initiatives to offset the negative impacts in the market, created by issues like gas price hike, tax on stock dividend, and the attempt to liquidate Peoples Leasing.

When contacted, Kazi Sanaul Hoq, managing director of Investment Corporation of Bangladesh (ICB), told The Business Standard that the state-owned investment company has a limited support fund, which is being prudently invested so that it does not get exhausted during the sharp market fall.

He said that the ICB needed more urgent funds to help increase buy-orders in the stock exchanges.

“Before budget, we submitted a recommendation to the government, which might increase ICB’s financial ability to stabilise the market. Based on that, Tk 760 crore has been handed over to ICB, of which two-third has already been injected to falling stocks. The remaining fund is not enough to support the market, if the situation continues worsening,” he said.