Stock turnover falls as big investors stay on the sidelines

Following a lack of participation from institutional investors for the past few days, turnover, an important indicator of the stock market, decreased by about 3 per cent to hit Tk 853 crore yesterday.

Many institutional investors are waiting on the sidelines and expecting a correction as they recently saw many stocks skyrocket by as much as 20 to 30 per cent, according to a stock broker.

Meanwhile, DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), edged downwards by 21.53 points, or 0.42 per cent, to 4,982.

"Some investors are taking profits now, which is impacting the index," he said, adding that the index tends to go down after any significant rise in profit booking.

The DSEX rose by 31 per cent or 1,200 points to 5,160 over the last three months, DSE data shows.

Some investors are forced to adopt the wait-and-see approach due to all the economic uncertainty brought about by the ongoing Covid-19 crisis.

Besides, the government fears a second wave of infections may arise in winter, he added.

Institutional investors are concentrating on investing in initial public offerings (IPO), because of which the market is getting dried up, said a senior official of an asset management company.

A number of subscriptions and bidding on IPOs have been ongoing for the past three weeks, he added.

The IPO bidding process for Associated Oxygen, Mir Akhtar Hossain and Energypac Power Generation were held in September, as per the DSE data.

The IPO bidding for three other companies is coming in October.

So, investors are saving money by selling their shares in the secondary market, according to the official.

However, a merchant banker said that they usually keep a fund aside for investing in the primary market.

Besides, issuing too many IPOs in a short span of time will discourage the rise of newly listed stocks, he added.

Meanwhile, Beximco topped the turnover list with shares worth Tk 34 crore changing hands, followed by Beximco Pharmaceuticals, Paramount Textile, Nitol Insurance and Sandhani Life Insurance.

Paramount Textile topped the gainers' list with a 9.92 per cent increase followed by Express Insurance, EBL first mutual fund, Karnaphuli Insurance and Green Delta Mutual Fund.

United Airways shed most, dropping 7.69 per cent followed by Fine Foods, GQ Ball pen, First Finance and Orion Infusion.