DSE indices fall sharply amid volatility

The benchmark index of the Dhaka Stock Exchange (DSE) fell sharply Wednesday with the turnover continuing to decline amid volatility. With the day's fall the market fell for the fifth time during the last eight trading sessions.
The high call money rate affected the market's total turnover, despite doubling of the share credit ratio, analysts said.
The benchmark DSE General Index (DGEN) closed at 8206.17 with a fall of 148.67 points or 1.78 per cent and 712 points or 7.99 per cent in total from its record high of 8918.51 on December 5.
The broader All Shares Price Index (DSI) shed 120.35 points or 1.74 per cent to end at 6807.15, while DSE-20 comprising blue chips lost 82.16 points or 1.65 per cent to 3006.71.
The inter-bank call money rate hit 175 per cent Wednesday, which was 60 per cent Tuesday, due to ongoing liquidity crisis in the money market, and it affected the stock market also, analysts said.
"Lack of investors' confidence, high call money rate, selling pressure of the institutional investors, and the Securities and Exchange Commission's (SEC) frequent directives jointly affected the market," said Prime Finance and Investment Ltd managing director Akter H Sannamat.
"Though the regulator raised the margin loan ratio to 1:1, it failed to uplift the market, as the financial institutions themselves are suffering from low liquidity due to high call money rate," he said.
"The year-end selling pressure from the financial institutions or institutional investors also contributed to drag down the market, as they have already started restructuring their stock portfolios ahead of the December closing," he added.
The Bangladesh Bank's recent directive against diversion of industrial credit to the stock market is also a reason behind the fall, dealers said.
Some financial institutions are trimming their portfolio to bolster reserve after the central bank raised the mandatory Cash Reserve Requirement (CRR) of the banks to six per cent, which contributed to reduce the turnover, market operators said.
The turnover stood at Tk 12.70 billion, down by 18.0 per cent than the previous session, and 60.0 per cent lower than the record-high of Tk 32.5 billion on December 5.
The losers took strong lead over the gainers, as out of the 243 issues traded, only 41 advanced, 199 declined, and three remained unchanged. Share prices of all major sectors declined.