146 scrips closed without buyers on Thursday

Dhaka stocks reacted negatively on Thursday (25 April) to the resurgence of regulatory intervention aimed at halting the ongoing decline.

Following the regulatory order issued a day earlier on Wednesday evening to limit the daily downward price change to 3%, from up to 10%, the market opened lower on Thursday. More and more stocks continued to hit the lowest allowable range for the day as investors feared fewer exit opportunities.

By the end of the day, 146 out of the around 400 scrips at the Dhaka Stock Exchange had no bidder interested in buying at the 3% lower price.

In the previous session, when stocks were allowed to fall by up to the regular limit of 10% in a day, only 94 stocks fell by 3% or more.

With the opening nosedive, DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), fell by nearly 100 points to a 36 month-low of 5,479 and it slightly recovered over the second half of the session.

At the end of the day, the DSEX closed 1.08% lower at 5,518.

Only 69 scrips, mainly small-cap ones, advanced while 300 declined and 27 remained unchanged.

Stockbrokers said the fall restriction reminded investors of the one-and-a-half years of the floor price mechanism, which deprived them of selling opportunities and resulted in holding worthless securities at a stagnant price.

The removal of the floor price ultimately led to a market decline as stock prices were previously stuck at inflated levels.

As many stocks were again suspended from trading, turnover in the DSE declined by 15% to Tk511 crore.

EBL securities in its daily market commentary wrote on Thursday, "The depressed capital market observed further backlash as investors adversely reacted to the regulator's effort to clutch down the prolonged free-fall with a revised lower circuit breaker limit to 3%."

"Sellers remained predominant right from the start of today's session as they were wary of the market's outlook, which led the majority of scrips to get stuck at the revised lower circuit without having sufficient buyers," it added.

However, some opportunistic investors opted to take positions in particular beaten-down small-cap stocks by the end of the session with the expectation of a potential short-term gain.

Pharmaceuticals contributed the highest, accounting for 25% of the daily turnover in the DSE, followed by the food and allied sector and IT.

Almost all sectors displayed dismal returns, with tanneries, food, and non-bank financial institutions experiencing the most significant corrections as their market capitalisation dropped by 2% to 2.5% on Thursday.

The small cap preference of investors helped increase market capitalization of jute, IT and paper sectors by 5.6%, 2.1% and 1.4%, respectively.

ADN Telecom, United Finance, Ambee Pharmaceuticals, Sonali Ansh and Kohinoor were the top five gainers as their price hit the top circuits ranging between 7.25% and 8.66%.

Indices at the Chittagong Stock Exchange also fell by around 1% on the same day, while daily turnover in the port city bourse declined by 57% to Tk11.1 crore