DSE index falls on lifting of GP floor price

The main index of Dhaka Stock Exchange (DSE) dropped by nearly 40 points yesterday, mainly due to the lifting of Grameenphone's floor price and as word got around that the bourse had transferred six companies to the Z category.

The DSEX, the key index, ended the first trading day of the week lower at 6,215 as it slipped 39 points, or 0.63 percent, from that on the previous day of trade.

Meanwhile, the DSES, which represents Shariah-compliant companies listed on the country's premier bourse, lost 0.73 percent to stand at 1,349.

Moreover, the DS30, which is comprised of blue-chip firms, went down 0.61 percent to reach 2,113.

The stocks dropped mainly due to the lifting of the floor price of the telecom operator, the largest company in the market in terms of market capitalisation, said a top official of a leading stock brokerage firm.

GP's stock price dropped 8.72 percent to Tk 261.6. The market leader of the telecom sector alone brought down the DSEX by around 17 points, according to LankaBangla Securities.

Square Pharmaceuticals followed suit, chipping away at the index by 5 points, followed by BRAC Bank with 3 points.

A large number of sell orders over the telecom company's shares was pending from foreign buyers. Once the floor price was lifted, the sell orders were executed, leading to the declines for the stock and subsequently the index.

The floor price will be lifted today for another large company, British American Tobacco Bangladesh. This may have the same impact on the index as some sell orders are also pending over it, he said.

In the meantime, the DSE transferred six companies to the Z category for non-compliance to regulations, which could also have contributed to the decline of the index.

The six are Active Fine Chemicals, AFC Agro Biotech, Fareast Islami Life Insurance Company, New Line Clothings, Prime Finance, and Prime Textile Spinning Mills.

However, turnover, which indicates the volume of shares traded during the session, rose 7.2 percent to Tk 982 crore. Of the issues that were traded on the DSE, 110 advanced, 242 declined and 40 were unchanged.

The stock market remains bearish as the central bank is squeezing the supply of money, which has a direct, negative impact on the stock market, said a merchant banker.

As this policy makes money costlier and as the deposit rate rose in the banking sector, people are rushing for the banking sector instead of the stock market, he said.

On the other hand, the drop might have ensued from an increase in the cost of doing business which listed firms were expecting following a fresh hike of gas and electricity prices last week, intensifying pressure on their bottom tiers, he added.

In order to lessen its subsidy burden, the government on Thursday increased electricity prices by Tk 0.70 a unit, effective from February 1.

Moreover, the authorities last week increased the price of gas supplied to power plants and for captive power generation by Tk 0.75 per cubic metre.

The Caspi, the broad-based index of Chittagong Stock Exchange, shed 87 points, or 0.48 percent, to 17,841. Of the companies, 95 went up, 126 down, and 39 saw no price fluctuations.

Turnover slipped to Tk 18.18 crore from Tk 19.81 crore.