Market cheers liberated trading

Defying the fears of a sharp fall, the stock market gave big thumbs up on Thursday to the liberated trading brought by the normalisation of the lower circuit breaker to offer the market a breathing space after four-month suffocation. 

Absorbing the short-lasting early-hour selloff at up to 10% lower prices, investors embarked on trading the falling knives and almost all the dipping stocks rebounded to pull the Dhaka bourse's broad-based index DSEX up by 0.83% to 5,804 during the closing bell.

Also, increased participation of investors helped increase daily turnover on the Dhaka Stock Exchange (DSE) by 7.2% to Tk963 crore.

Stockbrokers said the expectation for an interference-free and fair trading environment energised an increasing number of investors after the political and regulatory regime change earlier this month.

The Bangladesh Securities and Exchange Commission (BSEC), under previous chairman Professor Shibli Rubayat Ul Islam, was desperate to control prices through the floor or limit daily declines, whenever it feared a market correction.

According to market people, the unprecedented frequent market interferences hurt the key nature of the stock market and investors expect such a regulatory regime never comes back in Bangladesh.

As no stock was being allowed to fall by more than 3% a day for more than four months, it became selling stocks a tough task during correction phases and investors were deprived of the needed ease of stock switching to rebalance their portfolios.

EBL Securities in its daily market commentary wrote, "The benchmark index of the Dhaka bourse sustained the upbeat vibe, with buyers being dominant across the trading floor as recent reformation attempts taken by the stock market regulator have somewhat revived investor confidence to take positions in equities." 

On the day, 298 scrips advanced, 67 declined and the prices of 32 remained unchanged on the DSE. 

The BSEC, in the Wednesday evening order, also removed the price floors from four stocks — BSRM Limited, Khulna Power, Shahjibazar Power and Meghna Petroleum. 

The two power-producing companies, long stuck at the floor, failed to attract buyers at the lowest allowable price for the day and their price fell by 10% on the first free trading day.

On the other hand, Meghna Petroleum was trading above the floor, while BSRM Limited hitting the lower circuit rebounded to close 2.2% higher. 

Islami Bank Bangladesh and Beximco Limited are the two remaining stocks whose price floor is still applicable until further notice. In a controversial move for the second time, the BSEC more than two years ago imposed a floor price for all scrips that did not allow prices to go below the floor, depriving investors of selling opportunities. 

Earlier this year, it started removing floors from an increasing number of stocks and most of them fell free until finding buyers at lucrative price levels. 

On the sectoral front, pharmaceutical companies led the turnover contribution by making 17.4% of the DSE turnover on Thursday, followed by the food and the banking sectors. 

Most of the sectors generated positive returns, out of which non-bank financial institutions, ceramic and IT led with 5.5%, 4.5% and 4.4% increases in their respective market capitalisation. 

The telecommunication and the pharmaceuticals sectors faced moderate correction as their respective market capitalisation decreased by 0.8% and 0.3%.

Indices on the Chittagong Stock Exchange (CSE) were up by 0.5% to 0.7%, while turnover in the port-city bourse was 70% higher to Tk14 crore.