Stocks down as political tension intensifies

Although macroeconomic adversities cooled down a bit, the stock market fell for the second day on Wednesday as political tension delivered a blow to investors' confidence.

A segment of investors adopted a wait-and-see approach while profit-booking sale pressure of risk-averse investors drove the index down, market analysts say.

"The market succumbed to profit-booking pressure as investors' portfolio rebalancing continues, which led the benchmark index to close in negative territory for two consecutive sessions," said EBL Securities.

The market remained downbeat throughout the session on Wednesday as investors were busy securing short-term gains, with the market momentum weakening.

The DSEX, the key index of the Dhaka Stock Exchange (DSE), finally settled at 5,192, losing almost 11 points or 0.21 per cent over the previous day.

Activists of Chhatra Dal and students of anti-discrimination movement faced off in several universities last night, hours after clashes between the groups had left over 40 people injured at the Khulna University of Engineering and Technology.

Besides, profitability of most of the listed companies fell in the October-December quarter of FY25, compared to the corresponding quarter of the previous year, mainly due to higher borrowing costs and high inflation.

"If the macroeconomic situation deteriorates and the companies' profitability falls, stocks will plummet [on the bourses] simultaneously," said a leading stockbroker.

The news that the International Monetary Fund's fourth and fifth tranches of the $4.7 billion loan have been postponed to June this year also impacted investor sentiment.

The fourth tranche of IMF's fund was originally scheduled for March this year, but it was deferred as Bangladesh could not meet some prior conditions.

Some key financial indicators, including remittance and exports, continue to show growth while inflation and the yield rates of government securities are on the decline.

Usually, when the interest rate falls, the equity market gets a boost, but ongoing political tension makes investors jittery, said Md Sajedul Islam, managing director at Shyamol Equity Management.

The blue-chip index DS30, a group of 30 prominent companies, dropped more than 9 points to 1,913 while the DSES index, which represents Shariah-based companies, fell more than 2.0 points to 1,158 on Wednesday.

Islami Bank, BRAC Bank, BAT Bangladesh, Beximco Pharma, and Midland Bank jointly accounted for a 10-point fall of the DSEX.

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