Market maintains flat trajectory

Major indices of the stock market in Bangladesh have maintained a flat trajectory for about eight months now, providing little scope for investors to register gains or even losses.

This is because the floor price mechanism has made the market static as share values are maintained at certain levels rather than being decided by demand and supply, according to a merchant banker preferring anonymity.

And as the market has lost its natural course, investors are staying away for being unable make money by anticipating potential ups and downs, he said.

The merchant banker went on to say that only a few individual investors are currently participating in the market while most institutional investors remain on the sidelines.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), yesterday shed 8.51 points, or 0.14 per cent, to close the week at 6,207 points.

Average daily turnover of the DSE, which indicates trade volume, spiked 16 per cent to Tk 409 crore over the past five sessions compared to the week before.

The Bangladesh Securities and Exchange Commission set floor prices for every stock at the end of July last year in a bid to halt the freefall of market indices amid global economic uncertainties.

And although the market regulator had lifted the floor prices of 169 companies in December, it later reintroduced the mechanism in March this year.

The stock market ended the week with a negative stance amid quarter-ending sell-offs among investors, International Leasing Securities said in its weekly market review.

The prime index went downward during the first two sessions of the week but it mostly recovered during the later sessions.

Investors preferred to take position on the last day of the week based on the news that government would approve the draft bill of Banking Companies Act.

As per the proposed amendment, non-listed corporate bonds and debentures will excluded from banks' investment portfolio.

This will act as a catalyst for the development of the bond market as well as create more room for banks to invest in the secondary market, it added.

Sectoral performance showed a mixed pattern. Among the sectors, IT rose 3.6 per cent, service and real estate advanced 2.1 per cent, and tannery edged up 1.8 per cent.

However, paper and printing declined 4.5 per cent, pharmaceuticals and chemical fell 0.6 per cent and bank slid down 0.5 per cent.

Market movement this week was driven by negative changes in the market cap of pharmaceuticals, bank, and paper and printing scrips amid positive changes in the market cap of IT, services and real estate, and miscellaneous scrips, Shanta Securities said in its weekly market review.