The domestic stock market showed signs of recovery yesterday after news broke that the Bangladesh Securities and Exchange Commission (BSEC) would take steps to curb the recent falling trend.
The market was in a volatile state for the first two hours of the trading session but it ultimately settled down when the BSEC's decision became known.
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As such, the DSEX dropped 138 points within one hour of trading before the benchmark index of the Dhaka Stock Exchange bounced back by 17 points, or 0.27 per cent, to close at 6,474.
Besides, the BSEC's decision to lower the circuit breaker limit to 2 per cent from 10 per cent in order to curb the freefall of stocks amid the war between Russia and Ukraine was welcomed by investors.
For example, Shuvo Rahman, a general stock investor, said the move would help slow the downward trend of stocks in the country and so, he feels better about the market's prospects.
"If the fall reduces, then investors will regain confidence and invest further," he added.
However, a merchant banker feared that the market may become illiquid due to this decision if buyers feel unsafe with the prices as share prices could fall slowly as a result.
"This is a short-term policy to tackle the market fall, but it cannot save it in the long-run," he said, adding that foreign investors in the domestic market will feel shakier now because they want a free-float market.
And although foreign investment is comparatively low in Bangladesh, this may negatively impact the index as they hold stocks of well-performing companies and have a higher influence on the index.
Turnover at the country's premier bourse rose to Tk 746 crore yesterday while it was Tk 740 crore a day earlier.
Beximco Ltd was the most traded stock with shares worth Tk 59 crore changing hands followed by Bangladesh Shipping Corporation, Beacon Pharmaceuticals, Square Pharmaceuticals, and British American Tobacco Bangladesh.
The stock market bounced back after four days of a sharp fall as investors regained their confidence based on the decision taken by the BSEC to cut the circuit breaker to 2 per cent, International Leasing Securities said in its daily market review.
Among the sectors, cement rose 2.5 per cent, services and real estate edged up 2 per cent and ceramics ascended 1.8 per cent while tannery dropped 0.9 per cent, food and allied shed 0.9 per cent and general insurance fell 0.7 per cent.
Investors' attention was mainly concentrated on pharmaceuticals and chemicals (16.3 per cent), miscellaneous (12.4 per cent) and textiles (12.3 per cent). According to a merchant banker, the ups and downs in the domestic stock market are a result of changes in the global economy, which is in a tough spot right now due to high oil prices.
"So, the fall of the index was not unexpected as the oil market has become jittery," he said, adding that some investors still take risks in such situations by investing their funds.
Not one stock market regulator in the world has yet taken any steps to curb the market fall, but the markets can rebound on their own strength.
"But as the number of general investors in our market is higher, its strength is lower. With this backdrop, the regulator became concerned to boost it," the merchant banker said.
At the DSE, 217 stocks advanced, 116 declined and 45 remained unchanged. BD Thai Food topped the gainer list, rising 9.84 per cent, followed by Sun Life Insurance, BDCOM Online, Envoy Textiles and Intech Ltd.
Reliance Insurance shed the most, dropping 6.12 per cent, followed by BD Finance, Vanguard AML Rupali Bank Balanced Fund, Pragati Insurance, and Aramit Cement.
The Chittagong Stock Exchange also rose yesterday. The Caspi, the main index of the port city bourse, rose 28 points, or 0.15 per cent, to 19,018 at the end of the day.
Among the 274 traded stocks, 137 rose, 116 fell and 21 remained the same.
