Dhaka, Bangladesh (BBN)- The Dhaka Stock Exchange (DSE) experienced extreme volatility and bearish trend in the week that ended Thursday, as liquidity shortage hit both money and capital markets.
The call money rate hit 190 per cent on Sunday, a record for the country's money market, and the DSE also suffered the biggest-ever fall on the same day.
On the day, the DSE General Index (DGEN) nose-dived by 551.77 points or 6.72 per cent, beating the previous record fall of 3.32 per cent or 284.78 points, set on December 12.
Angry investors took to the streets at Motijheel in the capital Dhaka for the second time, which forced the Securities and Exchange Commission (SEC) to take steps to reverse the market trend.
Market insiders blamed the fall on the central bank's measures to control the liquidity flow in the banking system, the Financial Express (FE), a local newspaper, reported.
In an effort to contain inflation, the central bank recently increased the Cash Reserve Ratio (CRR) for banks to 6.0 per cent, which affected the stock market.
The regulatory body increased the margin loan ratio from 1:1 to 1:1.5, suspended the much-debated NAV-based margin loan calculation and execution of order relating to increased margin deposit by brokerage houses, and restored normal trading of Grameenphone and Marico on the day, the newspaper said.
Following the relaxation of the SEC rules, the market almost recovered the record fall in just two days, as the benchmark DGEN gained 515 points. At the end of the week, the DGEN closed at 8108.11, with a loss of 98.07 points or 1.20 percent.
The broader DSE All Shares Price Index (DSI) lost by 78.52 points or 1.15 per cent to end at 6728.63, while the DSE 20 blue chip index shed 76.31 points or 1.56 per cent to end at 4961.44.
"Although the regulatory body was able to reverse the market trend, there was no impact in the liquidity flow of the market. The daily average turnover for the week was 3.0 per cent lower than the previous week," the BRAC-EPL said in its weekly commentary.
Banking and telecommunications sector, the largest and third largest sector in the DSE, were the only gainers in the week. Banking and telecommunications gained 1.29 per cent and 20.68 per cent respectively.
Non-banking financial institutions and cement sector were the worst sufferers of the week, and they declined by 4.29 percent and 4.24 percent respectively.
Among others, general insurance sector lost 3.52 percent, pharmaceuticals 2.03 percent, life insurance 1.81 per cent, mutual funds 1.65 percent, and fuel and power 0.81 percent on the week.
The daily average turnover was BDT 15.19 billion, marking 3.38 percent decline, compared to that of the previous week. Out of 251 issues traded, only 53 gained, 193 declined, two unchanged, and three were not traded.
Grameenphone topped the turnover list of the week, with shares worth Tk 4.66 billion changing hands. The other turnover leaders were Titas Gas, Natinal Bank, UCBL, Beximco Limited, Prime Bank, Southeast Bank, AB Bank, Bay Leasing, and Maksons Spinning.
Grameenphone was the highest gainer of the week, posting a rise of 20.68 percent, after it was transferred from spot market to the main trading floor, following Sunday's plunge.
The other gainers of the week were Libra Infusions, National Bank, Eastern Bank, Prime Bank, Titas Gas, BD Welding, Gemini Sea Food, Ocean Containers, and First ICB Mutual Fund.
The week's prominent losers were Padma Oil, Sonali Aansh, Pharma Aid, Saiham Textile, Dulamia Cotton, Eastern Housing, Hakkani Pulp, Savar Refractories, Golden Son, and Imam Button.
BBN/SI/AD-25Dec10-12:38 am (BST)