Market opens today amid low confidence
Stocks had continued its bearish trend for a fifth week before the market went into a nine-day vacation on the occasion of Eid-ul-Azha.
The market opens today amid low confidence among investors as they are yet to get a boost to make fresh investment.
On November 3, the benchmark general index of Dhaka bourse, DGEN, declined 99.82 points or 1.88 percent week-on-week to end at 5,208.97.
The index started with 5,910 points in October and ended the month at 5,036.5 points or 14.80 percent lower than that of September.
Activities significantly declined in October while broad market average turnover plunged to Tk 333 crore or 6 percent lower than that of September.
Monthly volatility of the main gauge -- DGEN -- also spiked to 11.78 percent which was 7.21 percent in September as the market showed extreme behaviour. DGEN diving below historic psychological support level of 5,100 points after 22 months triggered panic sales in the market.
After consecutive losses of their portfolio, investors were rather under severe psychological pressure of further index decline and mounting burden of leverage, said LankaBangla Securities.
Most of the merchant banks dominant in stockmarket activities have already been overexposed, LankaBangla said.
Deteriorating local macro factors, recessionary fear in advanced economies, liquidity crunch in local market due to tightening monetary policy and skyrocketing government's bank borrowing kept those banks on the sidelines despite having allowable exposure limit in the market, it added.
For those reasons, in spite of a number of measures, the DGEN could not get the rhythm, the stockbroker added.
The situation has already become alarming, as various government measures have failed to bring back normalcy in the market, it said.
Before Eid-ul-Azha, most of the investors were reluctant to make fresh investment, while some of them adopted a wait-and-see policy to observe the market situation after the vacation.
Bangladesh Share Investors Association, a platform of retail investors, threatened to launch tough agitation programme and organise a 'grand rally' in Dhaka on December 7, if the government fails to stabilise the market by December 6.
The indices also bled from the beginning of October and a freefall was fanned for consecutive sessions by speculation of poor quarterly earning declaration.
Of the 30 stocks in the banking sector, 19 registered negative earnings growth in the third quarter of 2011.
Non-bank financial institutions were badly hit by the bearish stockmarket activities and the sector's earnings declined more than 50 percent this quarter.
Power disruption, energy price hike, high input cost and excess capacity due to lower demand have been taking a heavy toll on the cement sector.
However, the daily average turnover in the week stood at Tk 270 crore, 34.80 percent lower than the previous week.
The turnover on the DSE floor hit a three-year low in the first week of November. On December 17, 2008 the turnover was Tk 109 crore.
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