BSEC narrows circuit breaker limit to halt panic selling

The stock market regulator yesterday narrowed the scope for individual stocks to fall in a trading day in an effort to halt panic selling and thereby slow down the fall of the index.

The Bangladesh Securities and Exchange Commission (BSEC) issued an order recalibrating the circuit breaker, saying that stocks of listed companies would not be allowed to fall more than 3 percent based on the previous day's closing price.

Earlier it was 10 percent.

However, the upper limit, meaning the extent to which the price of a stock can rise, has been kept unchanged at 10 percent.

The order comes into effect from today.

However, it will not be applicable for stocks for which the market regulator already has floor prices in place.

The floor price is the lowest price at which a stock can be traded.

At the end of July of 2022, the BSEC set the floor price of every stock to halt the free fall of the market indices amid global economic uncertainties.

The floor price was the average of the closing prices on July 28, 2022 and the preceding four days.

At present it remains in effect only for five companies -- Beximco, Islami Bank Bangladesh, Khulna Power Company, Meghna Petroleum and Shahjibazar Power Company.

Meanwhile, the stock market investors have witnessed the erosion of their stocks for another day.

The Dhaka Stock Exchange's (DSE) benchmark index dropped 54.64 points, or 0.97 percent, from that on the day before.

It finally ended the day at 5,578 points, the lowest in three years.

The stock market investors are disappointed and in panic over the recent continuous fall of the index as they are having to see their funds decrease every day, said a mid-level official of a leading brokerage firm.

Most importantly, the investors do not see any chance of a rebound because institutional investors are not stepping up to support the market while foreign investors are also in the mood to make sales, he said.

This is making many investors ponder over whether it would be better off to sell their shares, even if it results in huge losses, he said.

Now, a market support mechanism is necessary for the market to rebound and once this happens, investors will regain their confidence and all can return to a positive trend, he added.

Meanwhile, the DSES, the index that represents Shariah-based companies, declined 6.16 points, or 0.50 percent, to 1,229.

However, the DS30, which comprises blue-chip stocks -- a group of 30 renowned companies -- increased 4.25 points, or 0.21 percent, to 1,984.

Saidur Rahman, a stock market investor, said he took a loan of around Tk 10 lakh from his sister to invest in late January seeing that most stocks of companies with a good performance record being traded at low price.

The value of his stocks has been decreasing every day and the total loss has reached around 20 percent up until yesterday. Now he is worried over how he would regain the funds and repay his sister.

Worse still, this is a common scenario plaguing almost all investors of the stock market.

Of the issues traded on the DSE, 79 edged up, 274 declined and 41 did not see any price fluctuation.

Turnover, which indicates the volume of shares traded during the session, increased 0.87 percent to Tk 602 crore compared to that of the previous day.

Information technology is the only sector to close in the positive while non-bank financial institutions, general insurance and life insurance sectors closed in the negative, according to a daily market update of UCB Stock Brokerage.

The pharmaceutical sector dominated the turnover chart, accounting for 21.46 percent of the total.