Stocks take further blow as investors not swayed by supportive measures

The country's stock market continued to suffer erosion despite a decline in interest rates of Treasury bonds and market supportive measures announced by the interim government.

Higher rates of Treasury bonds surpassing 12 per cent have been blamed for a diversion of funds from the equity market to fixed-income securities against the backdrop of negative returns from the former.

The stock market is usually expected to react positively when the yield of government securities falls. The interest rate of 5-year T-bonds was cut on Tuesday to 11.99 per cent from 12.39 per cent. On the same day, the Dhaka Stock Exchange (DSE) experienced a sharp fall by 0.95 per cent or 47 points to close at 4874.58 points, with a turnover of less than Tk 4 billion.

Apart from 5-year T-bonds, 2-year T-bonds and Treasury bills of 91 days, 164 days and 182 days recently experienced a decrease in the yield rate as the government moved to help the private sector grow while bringing down inflation.

When asked to pinpoint the cause of the market's fall on Tuesday, S M Galibur Rahman, head of research and strategic planning at Shanta Securities, seemed to be at a loss for words.

"Usually, the equity market is supposed to rise following any decline in Treasury rates. But there is no reflection in the equity market of the [latest] developments in the money market," Mr Rahman said.

Meanwhile, Chief Adviser Muhammad Yunus on Sunday held a much-expected meeting with the government's top brass and announced five key measures, including listing of profitable state-run entities (SoEs), to revive the equity market.

The DSE broad index DSEX regained 100 points last Thursday after a record fall by 149 points in the previous session. The recovery is believed to have been supported by the news over the chief adviser's meeting.

Monday's market was upbeat, drawing inspiration from the outcome of the CA's meeting the day before. But enthusiasm over the market fizzled out by Tuesday.

Tuesday's session opened with a positive note. The Dhaka bourse showed a flat movement until the mid-session and then it went downhill, losing 60 points ahead of the closure.

The DSEX eventually recovered slightly within the last 10 minutes.

Market leaders, including Square Pharmaceuticals and Beximco Pharma, played a pivotal role behind the day's erosion. The day's fall was intensified by the blue chips as 21 out of 30 stocks closed into the red.

As a result, the DS30 index slid 1.12 per cent or 12.10 points to close at 1063.79 points.

Of the 398 issues traded, only 54 advanced, 309 declined and 35 were unchanged on the DSE trading floor. The DSE featured a turnover of Tk 3.43 billion.

A majority of the companies in the pharmaceutical & chemical sector witnessed price erosion on Tuesday on the premier bourse.

Of the 34 listed companies of the pharma sector, 30 lost market value. Of the remaining four companies, only Libra Infusions had a marginal rise. The remaining three companies, including Renata, were unchanged.

Insiders say investors are jittery over macroeconomic concerns.

The data from the central bank reveals that net foreign direct investments plunged by 26 per cent year-on-year to $861 million in July-March of FY25. Also, the import of capital machinery slumped by 28.68 per cent year-on-year to about $ 1.52 billion during the same period of the current fiscal year.

Meanwhile, both the stock exchanges have decided to keep trading open on the next two Saturdays ahead of the 10-day vacation of Eid-ul-Azha.

On those days, the other offices, including banks, will remain open too in a bid to reduce loss of work for the long vacation.

mufazzal.fe@gmail.com