Bangladesh stocks suffered a major setback Monday as jittery investors dumped their holdings to avert further losses out of worry over the country's macroeconomic matters, including devaluation of the local currency.
Trade operators said the market witnessed a steep fall from the beginning of the day's trading session as the investors, particularly the retail ones, went for panic sales. The benchmark plunged below 6,500-point mark instantly at the opening.
Finally, DSEX, the core index of Dhaka Stock Exchange (DSE), shed 134.53 points or 2.05 per cent to settle at 6,431-the lowest count in 10 months since July 29, 2021.
The benchmark shed over 267 points in four straight sessions including that of Monday-evidently amid a sagging mood over latest economic situations at home, neighbourhoods and across developed economies as well owing to fallouts from the pandemic and the war in major global supply zone.
Market operators said worried investors continued offloading their holdings following the price corrections witnessed by heavyweight issues, including mutational ones.
"Some news such as devaluation of the local currency (taka) and rise in costs of imports might have an impact on the sentiment of general investors who executed panic sales," says a merchant banker, wishing anonymity.
Monday's index tumble was also the steepest single-day one in more than two months since March 7 this year when the DSEX plunged 182 points amid escalation of the Russia-Ukraine war that blocked supplies of energy and basic products across the globe.
From the market capitalisation, which refers to the total market value of companies' outstanding shares, some Tk 190 billion was eroded in just four days to Tk 5,217 billion on Monday as investors sold off large-cap stocks.
The securities regulator, Bangladesh Securities and Exchange Commission (BSEC), has continued its effort to enhance liquidity support through banks and stockbrokers to heal the market tantrums.
Former BSEC chairman Faruq Ahmad Siddiqi notes that the output of managed funds does not sustain unless the market gets back its own strengths.
"Institutions should not be kept under pressure to provide funds. It's also not possible for the regulator to support and monitor the market on a day-to-day basis," says Mr Siddiqi about what he indicates patchwork.
He, however, says investors should also not get panicked as the market has not witnessed such a dire straight as cannot be improved.
"There is no alternative to increasing the amount of fundamental shares in the market. Investors who purchase fundamental shares are not affected," the former BSEC chief observes.
Five large-cap stocks such as Wanton, British American Tobacco, Robi, Beximco and LafargeHolcim in a drove contributed 40 points the fall of DSEX, according to amarstock.com, a market-data analyst.
Mohammad Rezaul Karim, a BSEC executive director, said they had observed that institutions had no role behind Monday's fall of the market.
"Mostly, general investors executed panic sales that triggered the fall of index," said Mr Karim, also the BSEC spokesperson, explaining the situation.
He feels that many ones' negative remarks on different macroeconomic issues might have cast an impact on investors' minds.
"The securities regulator has taken some informal measures to accelerate liquidity support for the market. The Investment Corporation of Bangladesh (ICB) and the Capital Market Stabilisation Fund are likely to come up with liquidity support soon," the BSEC spokesperson spoke in a briefing.
Meanwhile, sources said the ICB Monday sent letters to different banks with a plea for revising the timeframe of repaying term loans as part of a rescue measure.
The BSEC spokesperson, Mr Karim, thinks that the market will get a support if the ICB is not required to offload share for repaying term loans.
A market-insider says local currency depreciation, imbalance in current-account balance, price hike of essentials and anticipation of restrictive economic policies prompted investors into selloff to leapfrog further losses.
He notes that some western countries, including the United Sates, have warned that their economies may fall into recession, which is a cause for concern among local investors as these countries are major export destinations for Bangladesh.
A rise in imports, deficit in current-account balance, shortage of dollars and rise in business costs have become major concerns for investors, according to a leading stockbroker.
The media reported that Bangladesh's current-account deficit hit an 'all-time high' at $14.07 billion as widening trade gap coupled with lower remittance receipts affects the macroeconomic balance.
"Feared bank-interest hike, the global commodity price instability coupled with Sri Lanka's economic and political crisis hit stock investors' sentiment," says one stockbroker.
Turnover, a crucial indicator of the market, however, rose to Tk 10.18 billion, 24-percent higher than the previous day's tally of Tk 8.23 billion, led by sell pressure.
The risk-averse investors opted out due to the fear of regulatory intervention on the interest rate to fight rising inflation, the stockbroker adds.
All the sectors faced selling pressures, leading to the share-price erosions of more than 91-percent stocks. Out of 381 issues traded, 348 declined, 26 advanced and seven unchanged.
Shinepukur Ceramics was the most-traded stock with shares worth Tk 602 million changing hands, followed by Beximco, JMI Hospital Requisite Manufacturing, RD Food and Fu-Wang Ceramic.
Chittagong Stock Exchange (CSE) also followed suit, with the CSE All Share Price Index (CASPI) shedding 382 points to settle at 18,866 and its Selective Categories Index (CSCX) losing 229 points to close at 11,321.
Of the issues traded, 266 declined, 33 advanced and seven issues remained unchanged on the CSE trading floor. The port-city bourse traded 16.08 million shares and mutual-fund units with a turnover value of Tk 432 million.