Stocks drop on speculation

Dhaka stocks Tuesday returned to the losing track on speculative impact of lending rate cut and on price fall of the bank securities, which saw surges on the previous, market operators said.
‘Profit taking selling was one of the reasons for the fall in the prices of the bank shares,’ said Salahuddin Ahmed Khan, who teaches finance at Dhaka University. ‘Bangladesh Bank’s decision on cutting lending rate for banks may trigger the sales off,’ he said.
The central bank on Tuesday asked banks to cut lending rates to a maximum 13 per cent except for credit card and consumer loans to help deal with the fallout of global financial downturn on Bangladesh’s economy.
Salahuddin said, ‘Lending rate cut keeping the deposit rate unchanged may lower bank profits.’
The general index of Dhaka Stock Exchange lost 27.71 points, or 1.12 per cent, to close at 2,438.45, while its blue chips index, DSE20, shed 37.99 points, or 1.99 per cent, to finish at 1,872.36.
Of the total 26 banks’ shares traded on Tuesday, 24 saw fall in their share prices. In the day’s top 10 losers’ list, seven were banks.
A merchant bank official said ‘speculative’ nature of investment made the market volatile, prompting ‘quick shift’ of the investors from one stock to another.

The New Age