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Stocks suffered a big jolt on Sunday, the first trading day following the removal of the floor price, as jittery investors dumped their holdings, fearing further erosion of their portfolios.
Within five minutes of trading, the key index of the Dhaka Stock Exchange (DSE) plunged about 214 points but later recovered most of the initial losses.
DSEX, the prime index of the DSE, finally went down by 96.50 points, or 1.52 per cent, to settle at 6,240.
DSES, which represents Shariah-based companies, also fell 14 points to 1,374.
However, DS30, which consists of blue-chip companies, managed to close 7.48 points, or 0.35 per cent, higher to 2,137, as Brac Bank, Square Pharma, Bangladesh Shipping Corporation and LafargeHolcim posted gains.
Market operators said the fall was largely expected as a large number of stocks failed to see price discovery for a long time due to the floor price.
Welcoming the floor withdrawal move, a leading stock broker said the market might see some correction in the first few days.
“It’s nothing to be feared, and the market will recover very soon,” he said.
The daily turnover on the Dhaka bourse also dropped 7.50 per cent over the previous session and amounted to Tk 5.89 billion.
The majority of the traded shares saw price erosion, as out of 386 issues traded, 296 ended lower, 54 higher and 36 remained unchanged on the DSE.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) lifted the floor price on Thursday evening after 18 months, except for 35 stocks that were believed to be at risk of freefall and had a huge impact on the index.
On July 28 last year, the BSEC imposed the floor price on all stocks by calculating their average prices from the preceding five days to stop the index from falling from the war-induced economic uncertainties.
The decision was criticised by most analysts and foreign investors. However, the regulator continued with the floor price for 18 months.
The Chittagong Stock Exchange (CSE) also ended sharply lower, with the CSE All Share Price Index (CASPI) losing 476 points to 18,329.