Stocks suffered a big jolt on Wednesday as the core index, DSEX, of the Dhaka Stock Exchange (DSE) slumped to a 32-month low.
The free-fall in share prices sent jittery investors to dump their holdings with an eye to preventing further losses.
DSEX eroded 75.78 points or 1.51 per cent to settle at a 32-month low to 4,933 points. On December 21, 2016, the index was 4,924.
It has lost a cumulative 1,017 points in the past seven months since January 24, when the index peaked at 5,950 points.
The market capitalisation also eroded Tk 503 billion to Tk 3,696 billion as of Wednesday, the DSE data shows.
The slide had began as the news emerged that the fiscal budget for 2019-20 was passed in parliament on June 30 without any significant incentive for stocks.
The market has hardly rebounded since then.
The government's supportive measures, including redefining banks' capital market exposure and amending public issues rules, also failed to boost fund flow.
Market analysts see lack of investor confidence, decision to use "idle funds" of state entities, telecoms regulator's row with Grameenphone and soaring non-performing loans behind this fall-off in stock prices.
The growing spat with GP has taken a new turn after the mobile operator announced its legal battle against BTRC over an alleged audit claim, said a leading broker.
The largest company in terms of capital, GP dropped further by 0.94 per cent, contributing over 6.0 points of the index's fall alone on Wednesday, he estimated.
GP share price has plunged more than 30 per cent in the past five months after the Bangladesh Telecommunication Regulatory Commission (BTRC) declared it to be a significant market power.
Financial sector is not performing well as investors are suffering from confidence crisis for soaring NPLs, which hit bank stocks hard, the analyst said.
Falling foreign portfolio investment and export earnings in August also eroded confidence of local investors, he added.
"Investor confidence got a battering, which triggered a panic sell-off, amid the depressed market outlook," said an analyst at a leading brokerage firm.
He said uncertainty and instability revisited the market as investors rushed to sell off shares to leave the market, thus contributing to another major fall.
The state move to liquidate People's Leasing also dented confidence as investors feared some other companies in the sector might face the same fate for their weak performance, he opined.
Mostaque Ahmed Sadeque, former president of DSE Brokers Association, said investors were not confident enough to inject fresh funds into stocks amid a dismal market outlook.
The government's decision to use "idle funds" of state-owned entities for development work also eroded investor confidence, he said.
Mr Sadeque noted that it [use of idle money] will intensify the ongoing liquidity crunch in the banking sector.
Referring to Titas Gas and GP, he accentuated coordination among regulators before taking any decision regarding listed companies.
He also highlighted the need for bringing good and reputed companies to the market to restore confidence.
New investors are staying off the market, selling shares fully as the market lacks direction, said Khairul Bashar Abu Taher Mohammed, secretary general of Bangladesh Merchant Bankers Association.
Mr Bashar, also CEO of MTB Capital Ltd, said the institutional investors had also maintained a cautious stance due to the ongoing liquidity crunch.
He underscored the need for a joint effort of the stock market stakeholders to bring back investor confidence to the market.
The prices of 82 per cent traded issues declined as 288 out of 353 issues traded closed lower, 37 advanced and 28 remained unchanged on the DSE trading floor.
Turnover, a crucial indicator of the market, however, rose 23 per cent to Tk 5.02 billion, amid selling pressure.
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