Stocks plunge amid confidence crisis

The benchmark equity index plummeted this week, wiping out all the gains from the previous week, amid lacklustre market trading during Ramadan.

Market analysts said cautious investors opted to stay on the sidelines amid sluggish market momentum.

The recent chaotic situation at the Bangladesh Securities and Exchange Commission (BSEC), centring around the forced retirement of Saifur Rahman, an executive director of the BSEC, also dampened the investor sentiment, said a leading broker.

Employees and officials of the securities regulator also observed work abstention on Thursday, demanding resignation of the BSEC Chairman Khandkar Rashed Maqsood and three commissioners.

Meanwhile, DSE Brokers Association of Bangladesh (DBA) and Bangladesh Merchant Bankers Association (BMBA) expressed deep concern over the incident between the officials and employees within the commission.

They demanded the intervention of the ministry concerned for a quick solution in the greater interest of the capital market.

In this situation, investors mostly opted to realise their short-term gains and stay on the sidelines.

Accordingly, sellers remained on the dominant side and the market witnessed a selling spree for the first three days of the week, pushing the key index down while the last two managed to inch up.

DSEX, the key index of the Dhaka Stock Exchange (DSE), finally settled the week more than 43 points or 0.83 percent lower at 5,204, after gaining 47 points in the week before.

In a statement, DBA President Saiful Islam said the country's capital market had been going through a critical time as a result of many negative events and decisions at home and abroad.

"Millions of investors have lost their capital and become destitute and market intermediaries are suffering from an existential crisis," he added.

Muhammad Nazrul Islam, secretary general of the BMBA, said the capital market had long been suffering from a liquidity crisis and that investor participation in the capital market was falling gradually amid a lack of confidence.

"The ongoing volatile situation may have further negative impacts on the market, which is unwanted. Many investors are turning away from the market after losing capital, and market intermediaries are also in crisis of existence," said the BMBA.

If this crisis is not resolved quickly, local and foreign investors may turn away from the market and entrepreneurs will be discouraged from raising money from the market, he added.

In a weekly analysis, EBL Securities said the market settled into losing territory this week as investors preferred to realize their short-term gains and stay on the sidelines amid lackluster market momentum during the Ramadan season.

However, bargain hunters emerged in later two sessions of the week to capitalize on the recent corrections, easing the selling pressure to some extent on the trading floor, said the stockbroker.

The blue-chip DS30 index, a group of 30 prominent companies, also lost more than 16 points to close at 1,889 while the DSES index, which represents Shariah-based companies, shed 6 points to 1,161.

Price fall of selective large-cap stocks, such as Islami Bank, BAT Bangladesh, National Bank, Beacon Pharmaceuticals and Grameephone dragged the market down as they jointly accounted for a 14-point drop in the key index.

However, low performing stocks continued to see price surge, without any reason for investors to be keen on betting on these stocks.

Three junk stocks -- Progressive Life Insurance, First Finance and National Tea Company -- featured in the weekly gainer list, soaring between 17.4 per cent and 8.02 per cent this week. Turnover, a crucial indicator of the market, fell sharply to Tk 18.13 billion this week, down from Tk 30.56 billion the previous week.

Consequently, the average daily turnover came down to Tk 3.63 billion, falling 30 per cent from Tk 5.10 billion over the previous week.

Investors were mostly active in the pharmaceuticals, which accounted for 15 per cent of the week's total turnover, followed by the textile sector (14.6 per cent) and engineering (10 per cent) sectors.

Most of the major sectors saw corrections this week. The non-bank financial institution sector faced the highest correction, losing 1.7 per cent, followed by food, engineering, banking, and telecommunication.

Orion Infusion was the most-traded stock for the second straight week with shares worth Tk 1.08 billion changing hands, followed by Prime Bank, Beach Hatchery, Shinepukur Ceramics and Al-Haj Textile.

The Chittagong Stock Exchange (CSE) also ended lower, with CSE All Share Price Index (CASPI) losing 130 points to 14,503 while its Selective Categories Index (CSCX) lost 73 points to 8,795.

The port-city bourse traded 7.75 million shares and mutual fund units, with a turnover value of Tk 196 million.

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