Share price of Miracle Industries Limited kept rising for the second consecutive day on Wednesday even after the company announced production suspension and a huge loss
It seemed to be a miracle in the stock market.
On Tuesday morning Miracle Industries Ltd announced a production halt due to a working capital crunch. The company also posted a huge quarterly loss.
Surprisingly, though, investors leapt at the opportunity to grab the company's shares at any cost soon after the bad news relating to the ailing company broke.
Some of them were too desperate to buy the shares even at a 10 percent higher rate when they could have bought them at a 10 percent lower price before the bad news came to the fore.
Tuesday was truly an eventful day for Miracle.
The plastic packaging manufacturer informed investors in the morning that it had suspended factory production in October. The reason given was that it did not have sufficient capital to finance short-term activities.
The company awaits a resolution of its disputes with its banker following a rescheduling of its unpaid loans.
On the same day, the company also posted a net loss for the July-September period, which is five times higher than the profit it made over the corresponding period in the previous year.
The bad news seemed to be good news at the stock market as Miracle shares at the DSE closed as high as possible in a single trading session.
"There were no sale orders even at a 10 percent higher rate for most of the day," said a floor trader. "The desperate buying confused me and I was left wondering whether big losses, capital shortage and production suspension are actually any bad news. It is insane," said the experienced trader, seeking anonymity.
"Why did the buyers not turn up before the news broke and so save 10 percent in costs?" The question came from another floor trader.
The trader wondered, "Either they came after knowing of something in an exclusive way about the company or they are just manipulating the market."
Miracle shares kept surprising the market on Wednesday too. The shares jumped to the highest allowable limit for the day.
But later, at the concluding part of the trading session, buyers got cautious. The stock closed at 4.4 percent higher at the end of the day.
Meanwhile, floor traders came down hard on the company secretary over the delayed disclosures of vital business information, notably suspension of production which they said was a gross violation of securities rules.
The relevant department of the Bangladesh Securities and Exchange Commission (BSEC) is looking into the matter, confirmed its spokesperson and Executive Director Md Saifur Rahman.
Capital market, or casino?
"Investors have the right to buy or sell any listed shares within exchange-allowed price limits at any trading session. But no one has the right to manipulate prices as it is detrimental to the general people and the market" said Professor Abu Ahmed, a stock market expert.
Abu Ahmed, Emeritus Professor of Economics at the University of Dhaka, also called for an investigation by regulators. Such an inquiry, he believes, will answer the question of who bought the company shares and why they did it in such an irrational way.
General investors get confused about what they should do in the stock market when they see such peculiar market behavior, and manipulators tend to cash in on the confusion, added Prof Abu Ahmed.
The worst effect of such incidents will have people treating the stock market as a casino-like entity," he commented, adding, "It is a hindrance to the growth of the capital market".