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The daily trade turnover on the Dhaka Stock Exchange (DSE) tumbled below Tk 4 billion on Wednesday after three weeks as investors were mostly reluctant to make fresh bets on stocks amid macroeconomic concerns.
Turnover, a crucial indicator of the market, was Tk 3.93 billion on the country's premier bourse on Wednesday, 24 per cent down from the previous day.
Market operators said investor participation was low, driven by prevailing political and economic tensions.
The disclosure of a record amount of non-performing loans (NPLs) in the banking sector, coupled with the downgrading of sovereign ratings of the country by Moody's heightened worries surrounding the equity market.
NPLs in the banking sector soared to a historic Tk 2.85 trillion in September, accounting for around 17 per cent of total outstanding loans. The real financial condition of the banks has been exposed by the interim government.
Moody's downgraded Bangladesh's long-term ratings to B2 from B1 and said the outlook has been changed to "negative" from "stable".
Liquidity risks, external vulnerabilities and banking sector risks have been magnified by the recent political and social unrests that led to a change in the government, said Moody's.
Political uncertainties and sluggish growth force Bangladesh to rely increasingly on short-term domestic debts to finance deficits, which in turn gives rise to liquidity risks.
This is the backdrop against which last week's approval of a sovereign-guaranteed loan of Tk 30 billion to state-run Investment Corporation of Bangladesh failed to elicit positive investor response.
The market suffered a loss of 113 points in the three sessions to Tuesday while it gained slightly by 2.6 points to 5,245 on Wednesday.
The market ended in the green zone, said EBL Securities, because of price appreciation of particular large-cap stocks, which had experienced significant corrections in the previous few trading days.
Cautious investors were observing the market's momentum to identify sector-specific stocks with potential to recover following earnings disclosures.
Islami Bank, which fell 4.5 per cent in the previous day, posted a 3.4 per cent gain on Wednesday, contributing to a 12.8-point rise of the key index.
On the other hand, BAT Bangladesh, Beximco Pharma, BRAC Bank, Olympic Industries, and IFIC Bank jointly accounted for a 14-point correction of the key index.
Subsequently, the DS30 index, a group of 30 prominent companies, lost more than 8 points to 1,934 while the DSES index, which represents Shariah-based companies, gained 8.6 points to 1,162.
Investors remained mostly cautious in the prevailing economic environment and amid political uncertainties, said Sajedul Islam, managing director of Shyamol Equity Management.
Among the major sectors, non-bank financial institutions saw the highest gain of 5.2 per cent. It was followed by the banking and telecom sectors while the power sector suffered the most, losing 0.6 per cent.
Most of the traded stocks saw price correction, as out of 379 issues traded, 183 closed lower, 113 higher, and 83 remained unchanged.
Investors were mostly active in the banking sector, which accounted for 17 per cent of the day's total turnover, followed by food (14 per cent) and pharma (13 per cent) sectors.
Lovello Ice-cream was the most-traded stock with shares worth Tk 134 million changing hands, followed by Islami Bank, Investment Corporation of Bangladesh, Square Pharma, and Fine Foods.
Deshbandhu Polymer was the day's top gainer, rising 9.7 per cent while Shinepukur Ceramic was the worst loser, losing 7.1 per cent.
The Chittagong Stock Exchange (CSE) also ended lower, with the CSE All Share Price Index (CASPI) losing 19 points to settle at 14,672 and its Selective Categories Index (CSCX) shedding 11 points to 8,935.
The port-city bourse witnessed transactions of 2.83 million shares and mutual fund units leading to a turnover of Tk 62 million.