Stock floor price keeping buyers at bay

There was a dearth of buyers in the stock market of Bangladesh yesterday amidst the prevalence of a floor price for every stock set by the regulator to halt the free fall of the market indices amidst global economic uncertainties.
The DSEX, the benchmark index of Dhaka Stock Exchange (DSE), rose 39 points, or 0.63 per cent, to 6,230.
The DS30, the blue-chip index, increased 0.58 per cent to 2,190 points while the DSES, the index that represents Shariah-based companies, 0.93 per cent to 1,355.
Most of the investors were apprehending that the share prices of listed companies would fall further but were currently being unable to for the floor price, so they are not buying shares, said a stockbroker.
Most of the investors were apprehending that the share prices of listed companies would fall further but were currently being unable to for the floor price
In July, the stock market regulator set the floor price, meaning the lowest price at which a stock can be traded.
The floor price was fixed on the basis of the average of the closing prices on July 28 and the preceding four days.
If the floor price is withdrawn, the price will fall further, so investors shied away from pouring fund into stocks, said the stockbroker.
On the other hand, the performances of listed companies dropped in the last quarter, for which their stock prices deserve to fall but got stuck at the floor price, he added.
The stock market was nearly devoid of fresh investments due to the floor price, said a top official of a merchant bank.
If the floor price had not been there, the stocks may have gone down to their lowest levels and then could rise again for some new buyers, he said.
Now, the artificial prices of the stocks were only giving mental support to the investors. If they needed to sell shares for any reason, they would not be able to do so due to the dearth of buyers, he added.
At the DSE, 78 securities advanced, six declined, and 229 did not see any price movement.
Turnover, one of the important indicators of the market, rose 21 per cent to Tk 428 crore form that in the previous day.
Chartered Life Insurance Company topped the gainers' list, advancing 9.94 per cent. Eastern Housing, BDCOM Online, INTRACO Refueling Stations and Padma Islami Life Insurance also rose by more than 9 per cent.
The stock markets bounced back yesterday after a two-day slump because the bargain hunters showed their interest to make purchases on sector-specific stocks at lucrative prices, said International Leasing Securities in a review.
Unlike the last session, the market opened on a flying note and the upbeat continued till the end as cheerful investors put fresh bets on sector specific issues after the price adjustments of June-end declarations, it said.
All the sectors achieved price appreciations, except for tannery that dropped 0.5 per cent. The IT advanced 5 per cent, services 4.1 per cent and paper 4 per cent.
Based on the turnover, investors' activities were mostly centred on pharmaceuticals (21.8 per cent), IT (16.2 per cent) and life insurance (14.3 per cent) sectors.
Al-Haj Textile Mills suffered the sharpest fall, giving up 2 per cent. Sonali Aansh Industries, Bata Shoes, Orion Infusion and Premier Bank were also among those that suffered losses the most.
The Caspi, the all-share price index of Chittagong Stock Exchange, advanced 34 points, or 0.18 per cent, to close at 18,416.
Of the issues that traded on the bourse in the port city, 51 advanced, 17 declined and 75 did not show any price movement.
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