Stocks gain on margin loan facility after three-day plunge

A file photo shows investors monitoring stock price developments on a computer screen at a brokerage house in the capital Dhaka. – Photo New Age

Dhaka shares rose on Monday after a three-day drop that included a collapse in the previous session as a section of investors went looking for bargains after the Bangladesh Securities and Exchange Commission increased the ease margin loan for investors considering COVID-19 free fall in stock prices.

The DSEX gained 1.73%, or 88.49 points, to close at 5,177.48 points on Monday after dropping 284 points in the previous three sessions.

The BSEC on Sunday increased the margin loan ratio to 1: 0.8 from 1: 0.5.

Investors can now get a maximum loan of 0.8 Tk against their 1 Tk investment in the market.

The new ratio will apply if the DSEX remains below 7,000 points. If the index crosses 7,000 points, the previous ratio, 1: 0.5, would come into effect.

Trading hours on the country’s two exchanges – the DSE and the Chittagong Stock Exchange, were reduced to two hours, from 10:00 a.m. to 12:00 p.m., in a seven-day nationwide shutdown imposed by the government to control the coronavirus epidemic.

The closure began on Monday.

The key DSE index, DSEX, started to gain from the start of Monday’s session and kept the mood going until the end of the session as investors, encouraged by the regulator’s measure of margin lending, are on the hunt for bargains, market operators said.

Due to increased selling pressure in the market in recent weeks, the stock prices of many companies have fallen significantly and the shares could have faced more sales to adjust the loan-to-margin ratio, traders said. of the market.

They said the latest move would minimize forced sales in the market.

EBL Securities in its daily market commentary said:

“Dhaka shares saw a partial rally on the first day of trading amid the lockdown, as the regulator’s actions tamed the intense bearish mood.”

“In addition, the directive to increase credit facilities to 80% of the maximum margin loan limit has pulled the market up to place in the green today (Monday),” he said. -he declares.

The market faced a free fall on Sunday as the government declared the nationwide seven-day shutdown. Investors feared the market would also remain closed.

The government issued a notification on Sunday with 11-point instructions to follow during the shutdown.

Many investors have remained cautious in the trading room over concerns over a possible extension of the shutdown period and its negative impact on the economy, traders said.

The country reported 7,075 new cases of COVID-19 and 52 deaths on Monday.

Of the 342 scripts traded on the DSE on Monday, 231 advanced, 14 declined and 76 remained unchanged.

DSE revenue fell to Tk 236.6 crore on Monday in shortened trading, from Tk 521.17 crore in the previous session.

Average share prices across all sectors rose on that day.

Stock prices in the non-bank financial institutions sector climbed 3.1 percent, general insurance 2.9 percent, energy 2.2 percent, pharmaceuticals 1.2 percent and banks 1.1 percent.

DS30, a composition of 30 large-cap companies, rose 2.28%, or 43.53 points, to close at 1,944.65 points on Monday.

The DSES Sharia Index also added 1.42%, or 16.55 points, to stand at 1,182.72 points.

BEXIMCO topped the turnover chart with its shares valued at Tk 32.88 crore changing hands that day.

Robi, Beximco Pharmaceuticals, LafargeHolcim Bangladesh, Asia Pacific Insurance, British American Tobacco, Square Pharmaceuticals, Grameenphone, Bangladesh National Insurance Company and Provati Insurance were the other top revenue leaders for the day.

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