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Stock price can fall up to 3% a day: BSEC

In a bid to arrest the free fall in the stock market, the securities regulator set a limit on stock price fall at 3% in a day, leaving the upper limit unchanged to up to 10%.

The decision would be effective from Thursday, said the Bangladesh Securities and Exchange Commission (BSEC).

Following a few weeks of sharp volatility since the withdrawal of the floor price restriction in late January, Dhaka-Chattogram stocks nosedived and continued to fall for more than two months.

DSEX, the broad-based benchmark of the Dhaka bourse, failing the recent effort by the regulator and market intermediaries to restore investors’ confidence, fell below the 5,600 mark for the first time since 6 May 2021. The index had hit 6,473 on 12 February before its stubborn nosedive.

The narrowed downward price changing limit will not be applicable for the six stocks that are still at the floor price—Beximco, BSRM Ltd, Islami Bank, Khlula Power, Meghna Petroleum and Shahjibazar Power, according to the BSEC.

Analysts blamed the withdrawal of floor price when investors preferred fixed-income securities, especially, treasury bonds for a guaranteed 11-12% annual return.

Without enough appetite for stocks before the cyclical downturn is over, the previously invested people and institutions found themselves in dire straits as capital erosion became an almost everyday story for them.