Index down for 8th day as jittery investors keep trimming exposure to equities

Stocks witnessed yet another major setback on Thursday, extending the losing streak for eight days in a row, as investors continued to sell off their holdings amid growing concerns over economic uncertainties.

The latest regulatory efforts failed to stem the market plunge as investors, who have already lost confidence in the market, feel shaken by the recent free fall of the index, said market operators.

To boost liquidity flow into the market, the stock market regulator on Tuesday raised the free limit facility for ICB Securities, a subsidiary of the state-run Investment Corporation of Bangladesh, from Tk 100 million to Tk 500 million.

That means ICB Securities can invest up to Tk 500 million in a single trading session, using credit facilities, although the loan must be settled by the end of the day, with the ICB acting as a guarantor.

Earlier, the Bangladesh Securities and Exchange Commission (BSEC) on April 24 reduced the lower limit circuit breaker to 3 per cent from 10 per cent to slow the index fall.

Market experts said investors had long been dealing with a confidence crisis and that prolonged economic uncertainties coupled with macroeconomic cues aggravated investor sentiment.

Interest rate is likely to go up further following the recent policy rate increase by 50 basis points amid monetary tightening while the news of possible capital gain tax to be imposed on gains exceeding Tk 4 million dampened the market sentiment.

Panic-stricken investors continued to trim their exposure to the equity market to escape further losses.

Substantial price erosion of blue chip stocks dragged the Dhaka Stock Exchanges' (DSE) benchmark index down by more than 58 points or 1.09 per cent to 5,312, a fresh 37-month-low since April 15, 2021.

BAT Bangladesh, Renata, BRAC Bank, Beximco Pharma, and Beacon Pharma were jointly responsible for one-third of the day's index fall.

Accordingly, blue-chip index DS30, a group of 30 prominent companies, lost more than 22 points to 1,907 while the DSES index, which represents Shariah-based companies, shed 15 points to 1,159.

The DSEX lost 384 points in the past eight trading days. The index lost more than 1,024 points or 16 per cent since the removal of floor price in January this year. At the same time, the market value shed Tk 1.35 trillion.

More than 200 securities are trading below the floor price out of 395.

Stocks fell sharply mainly because of some risk-averse investors' selling spree, said Royal Capital in its regular market analysis.

According to EBL Securities, negative perceptions about the market have led to investors' shying away from taking positions in equities while losses continued to mount on their portfolios.

"Sellers maintained their dominance across the trading floor as jittery investors sought to minimize further losses, while the majority of scrips turned into falling knives and kept on being stuck at the revised lower circuit," it said.

Turnover, a crucial indicator of the market, on Thursday stood at Tk 5.08 billion, 14 per cent lower than the previous day.

Three sectors --- food, pharmaceuticals and textile - accounted for more than 65 per cent of the day's total turnover.

All sectors faced selling pressure, leading to price erosion of more than 82 per cent stocks. Out of the 389 issues traded, 319 declined, 42 advanced and 28 remained unchanged.

The life insurance sector saw the highest loss, followed by non-bank financial institutions, ceramic and jute sectors.

Orion Pharma became the most-traded stocks with shares worth Tk 257 million changing hands, followed by Lovello Ice-Cream, Orion Infusion, Alif Industries, and Simtex Industries.

Simtex Industries was the top gainer, rising 7.32 per cent, while Unilever Consumer Care was the worst loser, enduring 3 percent correction.

The Chittagong Stock Exchange (CSE) also kept bleeding with the CSE All Share Price Index - CASPI -shedding 155 points to settle at 15,403 and the Selective Categories Index - CSCX -losing 96 points to 9,264.

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