Market sees worst week in two years as nervous investors run for cover

Stocks plummeted for the second straight week to Thursday, posting biggest single-week loss since May 2022, as nervous investors kept dumping the riskier assets fearing further economic slowdown.

The benchmark equity index also hit a fresh 37-month low as the latest regulatory measures failed to lift the investor confidence.

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.

The investors have long been suffering from a confidence crisis owing to prolonged economic uncertainties while adverse macroeconomic cues aggravated the situation.

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 over Tk 4 million and possible corporate tax rate hike dampened the market sentiment.

"Despite the regulatory initiative, the enduring pessimism failed to alleviate since the market remained dominated by sellers throughout the week amid uncertainties leading up to the national budget declaration," said EBL Securities.

This week, substantial price erosion of blue-chip stocks dragged the benchmark DSEX index of Dhaka Stock Exchange (DSE) down by more than 205 points or 3.72 per cent to 5,312, a fresh 37-month low since April 15, 2021.

This week saw four trading days, out of regular five, as the market was closed on Tuesday due to Buddha Purnima. And all the trading days suffered losses.

Blue-chips stocks -- Power Grid, BAT Bangladesh, Beximco Pharma, Renata and BRAC Bank -- were major index draggers as they jointly accounted for one-third of the weekly index fall.

The blue-chip DS30 index, a group of 30 prominent companies, lost more than 66 points to 1,907 while the DSES index, which represents Shariah-based companies, shed 53 points to 1,159.

On the other hand, the "Z" category stocks dominated the weekly gainers' chart. Out of top 10 gainers, six came from "Z" category.

The index lost more than 1,024 points or 16 per cent since the removal of floor price in January this year. During this period, the market value shed Tk 1.35 trillion.

Total turnover stood at Tk 20.70 billion this week, down from previous week's Tk 38.21 billion as this week saw four trading days instead of previous week's five.

Accordingly, the average daily turnover dropped to Tk 5.17 billion, which was more than 32 per cent lower than the previous week's tally of Tk 7.64 billion.

Three sectors -- pharmaceuticals, food and textile -- accounted for more than half of the weekly turnover.

All the sectors faced selling pressure, leading to price erosion of more than 87 per cent stocks. Out of 386 issues traded, 338 declined, 28 advanced and 20 remained unchanged.

The service sector saw the highest loss, followed by non-bank financial institutions, ceramic and IT sector sectors.

Orion Pharma became the most-traded stocks with shares worth Tk 1.05 billion changing hands, followed by Lovello Ice-Cream, Asatic Lab, eGeneration and Orion Infusions.

Mithun Knitting was the top gainer, rising 28.7 per cent while Apex Foods was the worst loser, enduring 11.4 per cent correction.

The Chittagong Stock Exchange also ended sharply lower, with its All Shares Price Index (CASPI) shedding 603 points to 15,403 and the Selective Categories Index (CSCX) losing 373 points to 9,264.

Of the issues traded, 252 declined, 39 advanced, and 14 others remained unchanged on the CSE.

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