Most banking stocks dropped yesterday, fuelled by apprehensions of a reduction of profits of lenders centring a Bangladesh Bank decision directing them to keep aside extra provisioning.

However, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), rose 20.59 points, or 0.40 per cent, to 5,147.

The lenders must keep an extra 1 per cent in provisioning than what they now maintain for their unclassified loans, according to a central bank's notice published last week.

Withnerves being rattled, stock investors were on a selling spree, said stock market analysts, adding that the BB decision would turn out to be good for the banking sector in the long run.

Among the 30 listed banks, the stocks of four witnessed a rise, four remained the same, and the remaining 22 dropped on the DSE.

Banking stocks normally remain at the top of the board in December because the listed lenders announce yearly profits in the following month, said stock investor Arup Ratan Roy, who studied finance.

But the stocks are dropping this year despite announcements of higher profits as of September amid the pandemic, he said.

Banks were asked to keep from classifying borrowers this year, thus lowering provisioning needs.

"So, banks' profits were higher until September," said Roy.

But the recent Bangladesh Bank decision will reduce their profits at the year's end, he added.

"I support the central bank's decision because it would support banks to survive in the long run," said the head of the research team of an asset management company.

If banks artificially show higher profits and provide higher tax and higher dividends to shareholders, it will deteriorate their health in the coming period, he said.

In the current month, the index rose 281 points, or 5.77 per cent, riding on blue-chip and multinational stocks.

Turnover, another important indicator of the stock market, stood at Tk 979 crore yesterday, down from Tk 1,003 crore the day before.

Dominage Steel Building Systems topped the gainers' list rising 9.89 per cent followed by Sonali Ansh Industries, Asia Pacific General Insurance Company, Purabi General Insurance Company, and SS Steel.

Beximco was the most traded stock, worth Tk 67.82 crore, followed by Beximco Pharmaceuticals, Dominage Steel Building Systems, IFIC Bank, and SS Steel.

Of a total of 358 companies to witness trade, 122 advanced, 166 declined, and 70 remained unchanged.

Aman Feed shed the most, losing 10 per cent, followed by Zaheen Spinning, First Finance, Metro Spinning and Tung Hai Knitting and Dyeing.