Stocks fell by 1.14 percent at Dhaka Stock Exchange today as investors went on a selling spree following what they termed an “unfriendly budget” for the capital market.
DSEX, the key index of the DSE, went down 50.2 points to stand at 4,346 points.
“Budget cannot be called capital market friendly,” LankaBangla Securities, a stockbrokerage, commented on its budget analysis for 2014-15.
“Few measures were discouraging. Especially capital gain tax introduction on individual level is a tough decision when the capital market is shaky,” the stockbroker said.
The 3 percent tax on capital gains from share sales, which comes as part of the government's efforts to meet its ambitious revenue target, will be applicable to any investor whose gain exceeds Tk 10 lakh and will be deducted at source.
The budget has increased the tax rate for good listed companies, it said.
“On top of that, the government has proposed to raise tax rate for listed companies, which is giving less than 10 percent dividend, from existing 27.5 percent to 35 percent.”
Apparently, these tax initiatives will slim the interest of private entities to be listed in the bourse, it said.
The investors reacted today as the budget failed to meet investors’ expectation for creating an environment to inject fresh fund in the market, said Md Moniruzzaman, managing director of IDLC Investments.
Small investors should not panick as capital gain tax will be imposed on big investors, Moniruzzaman said.
The stock exchanges also see the proposal to impose tax on capital gains as an “unfeasible plan” due to the lack of necessary infrastructure.
The losers took a strong lead over the gainers as 176 declined, 86 advanced and 27 remained unchanged out of 289 issues that changed hands today.
Turnover, one of the most import indicators of the market, stood at Tk 416 crore.