Weekly market review: Stocks sink as market sentiment still bearish

Stocks tumbled in the week to Thursday, wiping out almost all the gains from the previous week, owing to the short-term profit-booking tendency among the investors reeling from a confidence crisis.

The risk-averse investors opted to liquidate their positions across the trading floor, pushing the benchmark equity index down, market operators said.

Some of the recently rallied stocks saw price erosion as investors scrambled to secure short-term gains from the ailing market, they said.

Of the five trading days this week, three sessions suffered losses while two others managed to close in the green amid choppy trading.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), finally settled the week 39.93 points, or 0.64 per cent, lower at 6,220.24 after gaining 46.4 points in the previous week.

Stocks returned to the losing streak amid a confidence crisis stemming from worries about the weakening macroeconomic situation coupled with rising inflation, said a merchant banker, on condition of anonymity.

He said the prolonged bearish market condition, liquidity shortage and lack of institutional participation altogether eroded investors' confidence.

"Investor confidence continues to weaken, prompting them to liquidate their holdings while some remain on the sidelines in the absence of a major market trigger."

The merchant banker said liquidity in the market continued to be squeezed due to the floor price restriction as investors were reluctant to put fresh bets on stocks.

Large-cap stocks, which dominated the market earlier, remained unmoved due to limited liquidation opportunities, making investors reluctant to inject fresh funds.

This week's total turnover amounted to Tk 25.40 billion in the five trading days, slightly up from Tk 25.85 billion in the previous week, which saw four trading days.

And the daily turnover averaged out at Tk 5.08 billion, down 21 per cent from the previous week's average of Tk 6.46 billion.

The country's stock market has been suffering a severe liquidity crisis as investors could not participate in trading due to the price limit set on shares by the regulator to halt the free fall of the price indices, a stockbroker said.

Most of the issued remained unchanged due to floor price restriction as 378 issues traded, only 15 advanced, 141 declined and 222 remained unchanged on the DSE.

"The market experienced a significant correction, snapping the two-week winning streak, owing to the short-term profit booking tendency of the investors," EBL Securities said.

The market has yet to experience a major trigger to sustain a positive momentum considering the probable adverse impact of the prolonged inflationary pressures in the economy, the stockbroker added.

Stocks got back to the red after a two-week break as the risk-averse investors opted for liquidating their position to escape from further losses on their portfolios, said International Leasing Securities, another stockbroker.

The jittery investors remained pessimistic and reluctant to make fresh investments in the stocks amid worldwide economic turmoil riding on the banking failure, the stockbroker said.

Moreover, the inflation rate increased to 8.78 per cent in February compared to 8.57 per cent in January ahead of Holy Ramadan that created a negative sentiment to the investors, it said.

"All the news caused thin participation of the investors in the market," said the stockbroker.

Major sectors suffered losses. General insurance saw the highest correction, followed by life insurance, pharmaceuticals, power, engineering, banking and engineering.

The low-cap IT sector dominated the turnover chart, grabbing almost 19 per cent of the week's total turnover, followed by life insurance (16 per cent) and pharmaceuticals (12 per cent).

Rupali Life Insurance became in the week's turnover leader with shares worth Tk 1.45 billion changing hands, followed by Genex Infosys, Sea Pearl Beach Resorts, Meghna Life Insurance and Meghna Life Insurance.

Al-Haj Textile was the week's top gainer, soaring 11.86 per cent while Bangladesh General Insurance was the worst loser, shedding 15.97 per cent.

Two other indices of the DSE also edged lower. The DS30 Index, comprising blue-chip companies, shed 8.21 points to close at 2,218 and the DSES Index lost 5.48 points to finish at 1,356.

The Chittagong Stock Exchange (CSE) also ended lower with the CSE All Share Price Index (CASPI) losing 98 points to settle at 18,352 and its Selective Categories Index (CSCX) shedding 58 points to close the week at 11,001.

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