Stocks plunged 1.14 percent yesterday, the highest single day fall in the last one month, as investors were upset by a budgetary proposal that binds them to pay 3 percent tax on their capital gain above Tk 10 lakh.
DSEX, the key index of Dhaka Stock Exchange, lost 50 points to reach a five-month low at 4,346.
“Probably investors took the proposal of imposing capital gain tax negatively,” LankaBangla Securities said.
The withdrawal of the provision of 10 percent tax rebate for companies declaring more than 20 percent dividend also affected the market, the stockbroker said.
Companies that give more than 20 percent dividend now pay tax at 24.75 percent after a rebate of 10 percent.
“Now their effective tax rate will rise by 275 basis points. In a way, one can say this budget has increased tax rate for good listed companies,” LankaBangla said in its budget analysis.
The proposed budget is not capital market friendly, the stockbroker added.
Md Moniruzzaman, managing director of IDLC Investments, said investors reacted negatively as the budget failed to meet their expectations by creating an environment that will bring fresh funds in the market.
He, however, said small investors should not be panicked as the capital gain tax will be imposed on big investors.
BRAC-EPL, an investment and security analysis institution, also sees the capital gain tax as a blow to the stockmarket.
“While the magnitude of the tax ranging from 3 percent to 5 percent is not very high, it came at a time when the market was quite feeble. Therefore, our view is that it will create some near term market weakness,” it said.
Losers took a strong lead over the gainers, as 176 issues declined, 86 advanced and 27 remained unchanged on the premier bourse.
Turnover, an important indicator of the market, also declined 0.78 percent to Tk 416 crore.
A total of 0.83 lakh trades were executed with 9.89 crore shares and mutual fund units changing hands on the Dhaka bourse.
Lafarge Surma Cement dominated the turnover chart with 60.12 lakh shares worth Tk 50.24 crore changing hands, followed by BSRM Steel, Grameenphone, Generation Next and Meghna Petroleum.
Metro Spinning was the day's best performer, advancing 8.8 percent, while Samata Leather was the worst loser, slumping 7.16 percent.