Stocks witnessed the biggest single-day fall in 12 months Wednesday as worried investors continued heavy sell-offs, fearing further fall.
Brokers said the market continued bleeding as panic gripped the investors amid concern that money supply would be squeezed following the central bank's directive to slash the limit of banks' advance-deposit ratio (ADR).
"Fear of political uncertainty over the upcoming verdict of Khaleda Zia's graft case coupled with lower-than-expected earnings of some companies also dented investors' confidence," said an analyst at a leading brokerage firm, seeking anonymity.
AB Mirza Azizul Islam, former finance adviser to the caretaker government, said "Overall the monetary policy statement is expansionary and investors should not be worried".
He noted that there is no justification to be panicked over the money supply despite slashing the limit of banks' advance-deposit ratio as the central bank raised the private sector credit growth target.
However, he said, recent violence over Zia Orphanage Trust corruption case against Khaleda Zia has created panic among the investors.
The verdict in the Zia Orphanage Trust graft case against BNP Chairperson Khaleda Zia, her son Tarique Rahman and four others will be announced on February 8.
From the very beginning of the New Year, there were strong rumours in the stock market that the central bank is going to reduce the ADR and the stock market went through a downward trend since then amid periodic upswings.
Finally, the Bangladesh Bank (BB) slashed the limit of ADR on Tuesday to help check any possible liquidity pressure on the market due to the banks' 'aggressive' lending.
The ADR is re-fixed at 83.50 per cent for all the conventional banks and at 89 per cent for the Shariah-based Islamic banks. The existing ratios are 85 per cent and 90 per cent respectively. The banks must adjust it gradually by June 30.
The market started on downward trend and the negative trend continued till end of the session with no sign of reversal. Finally it ended more than 88 points lower.
DSEX, prime index of Dhaka Stock Exchange (DSE), settled at 6,039, slumping by more than 88 points or 1.44 per cent over the previous session.
It was the largest single-day fall since February 2, 2017, when DSEX fell 108 points or 1.97 per cent.
Two other indices of the premier bourse also saw sharp fall. The DS30 index, comprising blue chips, plunged 28 points or 1.23 per cent to finish at 2,239 and DSES (Shariah) dropped by 16 points or 1.13 per cent to close at 1,398.
According to EBL Securities, the market witnessed a major fall following the Bangladesh Bank's directive to slash the advance-deposit ratio which may push up the interest rate impacting the capital market indirectly.
The stockbroker noted that bleak scenario in most of the companies' earnings coupled with concern regarding the election year have ignited the selling pressure.
CSE also closed lower with CSE All Share Price Index - CAPSI- shedding 264 points to settle at 18,691 and Selective Categories Index - CSCX - falling 157 points to finish at 11,292.
Here too, the losers beat the gainers as 200 issues closed lower, 16 ended higher and 16 remained unchanged on the CSE.
The port city bourse traded 17.54 million shares and mutual fund units worth nearly Tk 434 million in turnover.