Stock market rout deepens with Tk 243b wiped out in six weeks

The benchmark equity index continued its downward trajectory this week, dropping to its lowest in nearly five years as investor sentiment remains battered due to lack of any positive cues.

Fears of further devaluation of the taka following the adoption of market-based exchange rate regime sent the investors rushing to the sidelines.

Although Chief Adviser Professor Muhammad Yunus rolled out a five-step plan to bolster the stock market at a meeting on Sunday, the bearish spell remains dominant in the market.

The plans include offloading government stakes in state-run and multinational companies to increase the availability of quality shares in the market.

The chief adviser also called for engaging foreign experts to implement comprehensive reforms in the stock market within three months.

He also called for strict and immediate punitive measures against those involved in corruption and manipulation, and urged large borrowers to consider raising capital from the stock market through equity and bonds rather than relying solely on bank loans.

But these initiatives failed to restore investor confidence as many kept dumping their holdings. As a result, the stocks extended their losing streak for a sixth consecutive session, deepening concerns about the market's outlook.

This week, the market ended lower in three sessions, out of four trading days. The market remained closed on Sunday on the occasion of Buddha Purnima.

The benchmark DSEX index of the Dhaka Stock Exchange (DSE) slid 121 points or 2.47 per cent to settle the week at 4,781, the lowest in five years since August 2020 when the coronavirus pandemic played havoc on the economy.

Price fall of selective stocks, such as Islami Bank, Square Pharma, Beximco Pharma, Beacon Pharma and BAT Bangladesh jointly accounted for a 46-point fall in the key index.

The prime index lost 425 points in the past six straight weeks while the market-cap shed Tk 243 billion during the time under review.

Market analysts said the prolonged downturn prompted investors to shy away from taking positions in equities, while losses continued to mount on their portfolios as the distressed market lacked any major catalyst to revive investor confidence.

"Due to the continuous market decline, many margin accounts came under forced sale, which exacerbated the index plunge,"said a leading broker, requesting not to be named.

EBL Securities, in its weekly analysis, said, "Although starting with a sense of cautious optimism surrounding the chief adviser's meeting over the prevailing market crisis, it quickly faded due to short of any strong outcomes to stimulate a positive momentum."

Moreover, investors preferred to adopt a cautious stance ahead of the upcoming budget declaration for the next fiscal year that also allowed the bearish forces to firm their controls over the realm of the market's momentum, it added.

Substantial price erosion of blue-chip stocks also dragged the blue-chip DS30 index down 50 points to 1,770 while the DSES Index, which represents Shariah-based companies, fell 35 points to 1,039.

The total turnover on the prime bourse stood at Tk 12.99 billion this week, down from Tk 24.6 billion the previous week, as this week saw four trading days.

Consequently, the average daily turnover plunged to Tk 3.25 billion, 33 per cent down from the previous week's figure of Tk 4.83 billion.

Investors were mostly active in the banking sector, which accounted for 16 per cent of the week's total turnover, followed by the food sector (14 per cent) and power sector (11 per cent).

Major sectors posted negative performance. The non-bank financial institutions sector experienced the highest loss of 5.07 per cent, followed by food, engineering, pharmaceuticals, banking and telecom sectors.

More than 81 per cent traded shares saw price erosion, as out of 396 issued traded, 322 declined, 50 advanced, and 24 remained unchanged on the DSE trading floor.

Beach Hatchery was the most-traded stock with shares worth Tk 738 million changing hands, closely followed by NRB Bank, Baraka Patenga Power, Square Pharma and AB Bank First Mutual Fund.

The port city bourse, Chittagong Stock Exchange, also ended lower, with the CSE All Share Price Index (CASPI) shedding 227 points to 13,477 while the Selective Categories Index (CSCX) fell 126 points to 8,240.

 

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