The Dhaka Stock Exchange (DSE) turnover nosedived to 5-year-low Tuesday, as investors, with meagre or zero faith in the market, refrained from investment, fearing further slide of share prices.
The turnover of the country's premier bourse stood at Tk 1.04 billion at the end of the day's trading, the lowest since January 8, 2008, when it was recorded Tk 815.47 million.
However, on January 20, 2011 the turnover was only Tk 680 million due to a five-minute trading period. Trading on that day was suspended following investors' violent protest against massive fall in stock prices.
The premier bourse's highest-ever turnover was Tk 32.49 billion on December 5, 2010, when its general index - DGEN - also hit the record of 8,918 points.
At present, turnover value at the DSE failed to cross even Tk 2.00 billion in the last 11 consecutive trading sessions.
"It says all about the current liquidity concern of the market," commented Zenith Group market analysis.
It was the fourth consecutive day of declining turnover. DGEN ended the day at 4,113 points, adding 1.55 points only, as the market could not come out of the existing sidewalk with even drier volume.
During the day's trading session, 266 companies and mutual fund units were traded on the prime bourse. Among them, 134 issues increased, 88 decreased and 44 remained unchanged.
Akter H Sannamat, managing director of Union Capital, said investors' low confidence was reflected in turnover and trade volume.
Moreover, institutional and big investors are inactive in the market due to severe liquidity shortage. Their inactiveness led small investors to adopt wait-and-see policy, he said.
"Issues like KYC (know your client), omnibus accounts, Padma Bridge and monetary policy made investors panicky, and they refrained from trading, casting negative impact on the market."
"Many big investors, who traded using omnibus accounts, are now inactive and out of the market, following separation of such accounts."
On the other hand, existing investors are not investing fresh funds, as they are confined to margin loan, which is also a reason of dry volume in the recent days, he also said.
"A huge amount of fund is stuck up as margin loan, following continuous slide of share prices, putting a negative impact on the turnover value," said Mr Sannamat.
He emphasised attracting foreign investors in the market to increase volume.
"The monetary policy should also be expansionary for industrialisation as well as creating jobs in the country," he added.
Yawer Sayeed, managing director of AIMS of Bangladesh, said false assurance of the market regulator and the government sharply eroded the investors' confidence, which was reflected in the market turnover.
"The government's stimulus package and interest waiver of small investors remains as a matter of words only. No action against market manipulators is also a factor behind the present situation."
He stressed on proper action against the market manipulators, responsible for the recent market debacle.
"The manipulators should be punished, otherwise, they will play foul again and again," he added.
The bearish trend is expected to be chronic, if the market does not get adequate liquidity support from the institutional investors, observed an analyst.
"The market saw the longest streak of volume drought during the last few weeks, and the investors seem to be puzzled with the market direction," he said.
According to Zenith Group market analysis, call money rate increased a little bit that might intensify the present liquidity shortage. But perhaps the effect wouldn't be that significant. Less change in index and volume at the same time is showing resilience in both demand and supply side.
The market is getting prepared for a turnaround. But its sustainability would depend on volume. The indices are trying to take support from the current level, but not being able to do so. Short-term indicators are altogether indicating that the prevailing sidewalk is likely to linger.
The demand-supply situation in the market is passing through a stagnant situation with diminishing rate of change, the Zenith analysis added.