Stocks suffer steep slide on renewed economic concerns

The benchmark equity index tumbled 2.07 per cent this week, registering its steepest single-week fall this year, as jittery investors dumped their holdings amid growing economic uncertainties.

Market analysts pointed to several negative factors rattling investor confidence, including a sudden hike in gas prices and rising concerns over potential corporate tax increases in the next fiscal budget.

The investor sentiment took a hit following gas price hike and rising interest rate in the government securities amid a tightened money market, said a leading stockbroker.

He said the unexpected gas price hike would negatively impact the manufacturing companies' production costs, which will hit the profitability of listed companies and dividend payout capacity.

Generally, the market tends to weaken when the yield rates of Treasury bonds rise as funds are diverted to the money market from the capital market.

Moreover, ongoing negotiations with the International Monetary Fund (IMF) over remaining loan tranches and delayed fund release also weighed on the market's momentum, said the stockbroker.

The IMF wrapped up its two-week mission on Thursday, without reaching a concrete decision for the remaining loan tranches, saying they will continue discussions to reach a staff-level agreement soon.

Consequently, the market witnessed a selling spree across the trading board throughout the week as investors preferred to offload their holdings to limit further losses, causing the benchmark index to plunge to nearly six-month low.

DSEX, the prime index of the Dhaka Stock Exchange, finally slid more than 108 points or 2.07 per cent to settle at 5,097, the lowest since October 29 last year.

The market-cap of the prime bourse, calculated by multiplying the total number of a company's outstanding shares with the current market price of shares, also shed Tk 11 billion this week.

Price fall of selective stocks, such as Beximco Pharma, Islami Bank, Prime Bank, Square Pharma and LafargeHolcim Bangladesh, dragged the prime index down as they jointly accounted for more than 42-point fall of the index.

In its weekly analysis, EBL Securities said stocks plunged as concerns over abrupt gas price hike and ongoing negotiations with the IMF for the remaining loan tranches have negatively affected investor sentiment.

The market witnessed a selling spree across the trading board as investors preferred to offload their holdings to limit further losses, causing the benchmark index to experience its steepest weekly decline so far this year, said the stockbroker.

Although some buying interest has been witnessed in particularly low-paid stocks, bearish sentiment continued to dominate the market throughout the week, said the stockbroker.

The blue-chip DS30 index, a group of 30 prominent companies, also plunged 53 points to 1,875 while the DSES index, which represents Shariah-based companies, lost 29 points to 1,143.

Apparently, market participation remained sluggish, as total turnover on the prime bourse slumped to Tk 15.96 billion this week from Tk 24.36 billion in the previous week as this week saw four trading days instead of five.

Consequently, the average daily turnover dropped to Tk 3.99 billion, 18 per cent lower from the previous week's figure of Tk 4.87 billion.

Investors were mostly active in the pharmaceuticals sector, which accounted for 14 per cent of the week's total turnover, followed by the banking sector (10 per cent) and food sector (9.4 per cent).

Major sectors posted negative performance. The cement sector experienced the highest loss of 4.2 per cent, followed by non-bank financial institutions, pharmaceuticals, banking, and telecommunication sectors.

The losers took a strong lead over the gainers, as out of 396 issues traded, 299 closed lower, 77 ended higher and 20 remained unchanged on the DSE trading floor.

Bangladesh Shipping Corporation was the most-traded stock with shares worth Tk 987 million changing hands, closely followed by Beach Hatchery, Beximco Pharma, Uttara Bank, and Shinepukur Ceramics.

The port city bourse Chittagong Stock Exchange also ended lower, with the CSE All Share Price Index (CASPI) shedding 250 points to close at 14,259 while the Selective Categories Index (CSCX) fell 149 points to 8,685.

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