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The country's equity index plunged to 5,161 points, the lowest in four months, on Sunday although the finance ministry and the securities regulator have taken several measures to improve the market.
The broad index fell sharply for the fifth consecutive session as panic-driven investors mounted selling pressure to escape further losses. In the last five sessions, the broad index of the Dhaka Stock Exchange (DSE) lost 262 points and turnover value remained below Tk 4 billion due to low investor participation.
The DSEX shed 1.8 per cent or 97.2 points as a majority of the blue chips experienced correction.
Deshan Pushparajah, country head of CAL Bangladesh, a foreign brokerage firm in Bangladesh, said the market is reacting mainly to higher interest rates.
People are drawn to investment tools giving better returns.
Moreover, financial disclosures of listed firms are corroborating concerns over poor macroeconomic situations.
On the market's recovery, Mr. Pushparajah said it would depend on improvement of the companies' performances and economic outlook. He also blamed the delay in withdrawing the floor price, which prevented the market from reaching the bottom at the right time.
The Dhaka bourse opened the Sunday's session with a positive vibe but soon the DSEX started to decline and the trend continued till the closure.
Of the 400 issues traded, 27 only advanced, 346 declined and 27 were unchanged on the premier bourse.
The premier bourse featured a turnover of Tk 3.62 billion, 18 per cent up from the previous session.
The blue chip stocks played the key role in dragging the broad index.
Of the 30 blue chip stocks, 26 declined, two advanced and the remaining two were unchanged. Subsequently DS30 fell 1.7 per cent or 34 points to close at 1,896 points.
On the day, all of the top 10 index draggers were blue chip stocks that wiped out 31.9 points from the DSEX.
Of them, BRAC Bank was the number one index dragger, followed by Beacon Pharmaceuticals, Olympic Industries, Square Pharmaceuticals, and Best Holdings.
After a change in the political regime on August 5, the newly-formed commission of the securities regulator has taken different measures including formation of a task force to make recommendations for the development of the capital market.
The regulator has also been taking opinions from stakeholders to set plans for listing of good companies. It held meetings with five top conglomerates to encourage listing of their companies.
But the stocks have continued losing prices, frustrating investors. Insiders said people's disposable income was reduced by high inflation.
Mr. Pushparajah said the regulator should not have interfered with the movement of the secondary market. From that point of view, the regulator now seems to be on the right track.
The sectors, which witnessed significant erosion on Sunday, include travel & leisure, general insurance, textile and engineering.
Investors' participation was concentrated on the banking sector that grabbed 19.5 per cent of the market turnover, followed by telecommunication 16.9 per cent and pharmaceuticals & chemicals 15.4 per cent.
Dulamia Cotton Industries was the number one gainer, with a rise of 9.17 per cent, while Sonargaon Textile was the top loser after losing 9.91 per cent.