Stock rally ends in a big jolt
An upward trend in the stockmarket for the previous six consecutive sessions ended in a steep fall yesterday.
The benchmark general index of the Dhaka Stock Exchange (DGEN) plunged 459 points, or 6.9 percent, to 6,179.
Insiders said the money market is once again becoming volatile due to the central bank's monetary measures such as increasing repo and reverse repo rates to contain inflation -- putting the institutional investors, especially financial institutions, into liquidity problem regarding stock investments.
Some financial institutions were forced to reduce their clients' purchase power, which caused a selling pressure from the investors, said an insider.
The drastic fall was also fuelled by a report from an online news agency on the uncertainty over forming a Tk 5,000 crore fund, the insiders anticipated.
Earlier, following a government prescription, eight state-owned enterprises announced to launch the Tk 5,000 crore fund styled “Bangladesh Fund” in a bid to financially support the secondary market, faced with a severe liquidity crisis.
However, the Investment Corporation of Bangladesh (ICB), the lead arranger of the fund, said the fund building process is going on accordingly.
“There will be no problem in launching the fund. We hope we can float the fund in time,” said Md Fayekuzzaman, managing director of the ICB.
He also called upon the retail investors not to sell shares based on any rumours, especially over the Bangladesh Fund.
Yesterday, all the major sectors declined sharply. Banks dipped 8.1 percent, while non-banks 5.5 percent, telecom 9 percent, pharmaceuticals 5.6 percent and power 7 percent.
Losers outnumbered advancers 245 to 10 on the DSE that traded more than 12.21 crore shares and mutual fund units worth Tk 1,266 crore.
Chittagong stocks also marked a sharp decline with the CSE Selective Categories Index plummeting 846 points, or 7 percent, to 11,245.