DSE turnover hits 6-month high as 79% of scrips enter free trading

On the second day without floor price restrictions, almost eight out of every 10 stocks, mutual funds, and corporate debt instruments listed on the Dhaka Stock Exchange (DSE) attracted buyers. The expanded trading opportunities contributed to the DSE turnover exceeding Tk1,000 crore after six months, nearly double the turnover from Sunday's opening session.

Additionally, all the indices closed higher recovering the early-hour losses.

"As prices were permitted to decline, an increasing number of stocks began to attract buyers gradually. This leads us to anticipate that the market is returning to its natural state," said Saiful Islam, the president of the DSE Brokers Association.

On Thursday evening, the Bangladesh Securities and Exchange Commission (BSEC) withdrew the floor price restriction for all but 35 scrips.

On Sunday morning, the broad-based index DSEX opened around 3% lower due to a free fall in nearly half of the listed scrips, previously stuck at the floor, and 52 of them had buyers later in the same session.  

The 129 closed at the lowest limit on Sunday and opened lower on Monday. However, with the inflow of the funds that were on the sidelines, most of them were rescued and only 52 ended the day at the lowest limit without bidders, while the 35 scrips still under floor price restriction also were out of regular trading.

DSEX closed 0.22% higher at 6,254 on Monday as 207 scrips advanced, 145 declined.

A stronger demand for selective stocks helped the blue-chip index DS30 outperform its broad-based counterpart by rising 0.48% on Monday.

Institutional investors, including stock dealers, kept buying shares they preferred at a lower price and the optimism for a recovery helped avert forced selling in leveraged accounts, said EBL Securities Managing Director Sayadur Rahman, who is also the president of CEO Forum, representing top 30 brokerage firms owned by banks or other financial institutes.

His forum, in a meeting before Sunday's opening session, had a consensus for not selling any falling stock after floor withdrawal, keep buying them and tolerantly handling leveraged accounts.

Funds were initially flowing into large-cap stocks with strong fundamentals, and gradually buying appetite increased for other stocks too, said stockbrokers.

"Bargain hunters took control of the trading floor and bagged the oversold stocks they believed to be at lucrative price levels," EBL Securities wrote in its daily market commentary on Monday.

Meanwhile, the BSEC on Monday evening announced freeing 23 more stocks from the floor price restriction leaving only 12 large-cap ones.

So, from Tuesday, only British American Tobacco Company Bangladesh, Beximco Limited, Anwar Galvanising, BSRM Limited, Grameenphone, Islami Bank, Khulna Power, Meghna Petroleum, Orion Pharma, Renata, Robi Axiata and Shahjibazar Power Company shares cannot go below the floor price.

DBA President Saiful Islam, who is also a director of Brac EPL Stock Brokerage, said the regulator's Monday decision was a good one as it freed more stocks for regular trading.

The lucrative price itself attracts investors and that is the biggest strength of the market, he said.

However, most of the stocks getting rid of the floor prices after being stuck there for long were yet to recover to the floor and that caused a 1.86% or over Tk14,000 crore decline in the total market capitalisation at the DSE since floor withdrawal.

The total market value of all the DSE-listed scrips dropped to Tk7.73 lakh crore on Monday, which was Tk7.87 lakh crore on 18 January.