Both individual and institutional investors at the Dhaka Stock Exchange (DSE) remained apprehensive especially with concerns regarding the ongoing liquidity issues in the market. The stocks in the DSE continued their upward trend till last week despite concerns but finally suffered its lowest level in a month on the 26th of August after steady increases for over the past weeks.

The steady rise of the stocks and the index of the DSE till late last week had been attributed by many analysts to both the individual and institutional investors buying up stocks in the different companies which have their financial year closing in June and with their dividend declarations imminent. However, with the deadline of September 1st looming when the Bangladesh Bank (BB) increases the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) of financial institutions, liquidity concerns finally caught up with the market this week and caused the main index of the DSE to fall by 58 points or 1.10 percent, its lowest level in more than a month.

BB had earlier asked all the scheduled banks in the country to comply with the CRR and SLR rules for their offshore banking operations from the 1st of September, and this had caused a loss of confidence to a banking sector already having issues with liquidity. The move from the central bank, although formulated to bring more stability to the banks, had caused the liquidity outlook of the market to suffer.

The overall investment outlook in the market seem to be fragile and volatile especially amongst the larger institutional investors, which seemed to adopt a cautious stance in the market despite many listed companies expected to have positive quarterly earnings. Till last week there were movements in the stock market triggered by the positive prospects of impending quarterly results and expected optimistic dividend yields. However, as financial institutions in the country are continually and increasingly being plagued by the lack of liquidity, this dearth seems to be making a strong negative presence in the DSEX, the main index of DSE.

In addition to the restrain shown by institutional investors in the market, there have been certain individual players gambling big on junk stocks, which has also adversely affected the market. Zeal Bangla Sugar Mills topped the gainers list on Monday and another junk stock topped the gainers in the DSE on Sunday as well, directly being influenced by widespread gambling in the market. The stock exchange regulators and authorities have found it increasingly difficult to oversee such adverse trades in the market and have also found it almost impossible to stop negative players in the market who continue to adopt a toxic, gambling stance.

Last week, the Bangladesh Securities and Exchange Commission (BSEC) approved the DSE to look into 4 additional companies which have been operating in the stock market for the past five years without issuing any dividends. These 'Z' category companies have been increasing in the premier bourse with 15 other companies also flagged by DSE and awaiting inspection since last august. Although the regulators are finally moving towards investigating these lowly performing companies, many experts think it is too little too late.

In addition to the fall of the overall index, DSEX, the turnover of the DSE has also suffered by declining to 447.16 crore, which is a fall of over 4.6 percent. Many experts point to the fact that without the large institutional investors, the market cannot possibly operate to a necessary level.