Investors cautiously observe the IMF-BSEC meeting

Stocks break their four-day gaining spell on Monday as investors chose to stay watchful on the day of the International Monetary Fund (IMF) visiting team's meeting with the market regulator.

DSEX, the broad index of the Dhaka bourse, declined by 0.35% or 22.7 points to close at 6,393.

Stockbrokers and analysts said investors were cautious mainly about if the IMF delegation raises any questions regarding the unconventional floor pricing mechanism the Bangladesh Securities and Exchange Commission (BSEC) imposed at the end of July this year to arrest the market fall amid the macroeconomic turbulences.

Following the meeting in the morning at the Securities Commission Building in the capital's Agargaon area, BSEC Executive Director Rezaul Karim said the discussion with IMF was a routine task and the floor price was not a part of the topics.

Analysts and investors, however, were cautious till the end of the trading session as some stress on corporate earnings and the macroeconomic uncertainties were still there.

"The market started with a downward trend and failed to turn around throughout the session since investors' selling pressure was prevalent on some major scrips, being induced by a bleak market outlook amidst ongoing macroeconomic adversities along with the apprehension of an unfavourable outcome from the meeting between BSEC and IMF," reads the daily market commentary by EBL Securities Research.

Moreover, recent dismal earnings disclosures from a majority of companies have also spiralled investors' concerns, prompting them to partially liquidate their holdings, it added.  

Nearly two-thirds of listed scrips are not trading in the bourses of Dhaka and Chattogram because of the floor price and investors who need immediate exit are suffering from the lack of buyers at the artificially held price.

On the other hand, a large number of retail investors are thanking the individual scrip price floors that are saving their accounts from capital erosion.   

Meanwhile, the Dhaka bourse observed a slight decrease in participation while the total turnover declined by 3.1% to Tk1,236 crores on Monday.  

On the sectoral front, IT with nearly one-fifth of the daily turnover in the Dhaka Stock Exchange demonstrated the strongest momentum as investors have been chasing technology stocks that showed earnings growth defying the overall corporate cost escalation and a threat of demand slowdown.

The pharmaceuticals and chemical sector contributed to over 15% of the DSE turnover on Monday, while the miscellaneous sector followed through.

Jute, life insurance and service-real estate sectors suffered the biggest corrections on Monday following their recent gains.

IT having a nearly 5% increase in market capitalisation led the gainers, while paper-printing and fuel-power sectors followed through.

Out of the 389 issues traded, 49 advanced, 97 declined and 243 remained unchanged.

The port city bourse, Chittagong Stock Exchange, also settled on red terrain.

The selected indices (CSCX) declined by 0.2% or 23.8 points to 11,315.