DSEX nosedives on Sunday after floor removal, but recovers 60% of early-hour losses

The post-floor stock market, following its rarely massive nosedive at the opening, demonstrated some resilience at the end on Sunday as the indices recovered most of their early-hour losses.

DSEX, the broad-based index of the Dhaka Stock Exchange (DSE), fell by 3.38% in five minutes as more than half of the listed scrips, freed from the floor price restriction, nosedived.

Later, contrarian investors' buying appetites helped arrest the fall.

Finally, the major index recovered 60% of the morning losses to close the session only 1.52% lower at 6,240 points.

"Sunday's stock market was a roller coaster show," said DSE Brokers Association President Saiful Islam, also a director at Brac EPL Stock Brokerage.

Despite the fact that many average investors were waiting to see how the market might behave during the transition towards free trading, the market actually got back to its expected normalcy in less than an hour as many investors joined trading from the sidelines, he said.

Before the opening bell, there had been a panic among investors that triggered the instant fall in nearly 200 scrips at a time, and the patient value investors, waiting for a liquid market, entered the scene with buying fundamentally sound large-cap shares like Brac Bank, Eastern Bank, LafargeHolcim Bangladesh, and Square Pharmaceuticals, according to Chartered Financial Analyst Md Moniruzzaman, managing director of Prime Bank Securities.

The blue-chip index DS30, showing an even bigger recovery, closed  0.35% higher at 2,137 points.

Buying confidence also spread among the investors of many other mid- and small-cap stocks that fell at the opening and recovered to a good extent.

Several scrips, including Brac Bank, even closed above the floor price as large investors, fond of the ease of buying and selling, started to make their bets bigger there.

"Institutional and smart individual investors had a constructive role on the crucial day," said EBL Securities Managing Director Md Sayadur Rahman, who is the president of the CEO Forum, which represents the top 30 brokerage firms owned by banks or financial institutes.

"At a meeting before the opening, we (the CEOs of the top 20 brokerage firms) had a consensus on not selling the falling shares from our dealer accounts; we agreed to buy shares from the market while handling the leveraged accounts of clients in a generous manner," he said.

All but 3-7 stocks were falling, while the number of gainers increased to 54 during the closing bell.

Finally, 129 scrips closed at the lowest limit for the day amid a lack of interested buyers, while 52 falling from the floor attracted buyers and entered normal trading.

A total of 177 of the 414 DSE stocks, mutual funds, and corporate debt instruments were in regular trading before the Bangladesh Securities and Exchange Commission ordered the withdrawal of the floor price restriction after Thursday's trading.

However, 35 stocks are still under the floor price restriction that the regulator imposed at the end of July 2022 to arrest the market fall triggered by the economic impacts of the Ukraine war, and it suffocated the market as investors of 57% were deprived of exit opportunities until this week.