Lockdown fears push stocks further down
DSEX fell 90 points or 1.71% to close at 5,164
Highlights:
- DSE turnover down 4.06% to Tk457 crore
- General insurance sector, highest contributor of 42.23% to turnover
- 24 scrips advanced, 264 declined, and 52 remained same at DSE
- CSE turnover halved to Tk14.4 crore
Since the lockdown is going to be stricter and no one knows the extent of its impact on the economy, nervous stock investors preferred to sell.
Indices at both the bourses suffered bigger declines for the second consecutive session on Sunday.
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DSEX, the broad-based index at the Dhaka Stock Exchange (DSE), fell 90 points or 1.71% to close at 5,164 on Sunday, following its 1.55% fall on Thursday.
Analysts attribute the recent panic to two major factors: the duration and degree of the coming lockdown, and the regulatory decisions regarding floor price and circuit breaker.
The market, suffering over a 3.4% decline at the beginning of last week, recovered somewhat until last Wednesday as investors bet on a liberal lockdown that might let the economy run, at least partially.
Meanwhile, amid the record high Covid-19 infections and deaths, the Bangladesh Securities and Exchange Commission (BSEC) decided to lift its floor pricing restrictions for 66 low and mid-cap scrips, as they were virtually dormant in the bourses due to buyer reluctance at floor price levels.
The unexpected move created a panic among small investors who feared a free fall following the disappearance of the unconventional protection.
Panic further engulfed a wider range of investors as soon as the government announced it is going to make the lockdown tougher.
The BSEC on Saturday came up with a counterbalancing mechanism considering the emergency that also engulfed the stock market.
It said, the 66 scrips can go down by 2% at best over a single session.
But the measure did not help to avert market slides and only 24 of the DSE scrips advanced on Sunday, while 264 declined, and 52 remained unchanged.
Noticeably, DSE's blue-chip index DS30 fell 1.88%, which is bigger than both the broad index and the Shariah index.
Total turnover at the premier bourse declined 4.06% to Tk457 crore on Sunday, with insurance stocks dominating turnover.
The general insurance sector contributed 42.23% to the DSE turnover while miscellaneous and banking sectors each made up slightly over 10% of the day's trading turnover.
All sectors returned negative, while the ceramic sector's market capitalisation contracted by 5.5%, and both the miscellaneous and jute sectors fell by more than 3%.
Meanwhile, the Chittagong Stock Exchange also closed the day deep in the red zone. Daily turnover halved to Tk14.4 crore at the port city bourse.
