Stocks witnessed yet another setback on Monday as jittery investors dumped their holdings to avoid further erosion of their portfolios amid fears over a possible economic recession ahead.
The market saw a free-fall from the beginning of the session as the shaky investors went on heavy sell-offs, pulling down the benchmark index below 6,300-mark instantly at the opening.
DSEX, the prime index of Dhaka Stock Exchange, slid 87.40 points or 1.38 per cent to settle at 6,217, lowest in almost two months. DSEX eroded 150 points in the past five sessions after the Eid vacation.
It was also the steepest single-day fall in more than two months since May 16, when DSEX shed over 134 points.
The market capitalisation also wiped-out Tk 98 billion in just five days and stood at Tk 5,090 billion on Monday as investors sold large-cap stocks.
Market operators said the stocks nosedived as looming global economic uncertainties and the country's macroeconomic cues hit investors' sentiment.
The market has been struggling for the past few months since the Russia-Ukraine war began which was exacerbated by fears over upcoming economic depression, said a merchant banker, seeking anonymity.
Continuous erosion of stock prices prompted the securities regulator to intervene in the market in the past few months to stop the free-fall.
The Bangladesh Securities and Exchange Commission (BSEC) in May reduced the lower limit circuit breaker to 2.0 per cent from 5.0 per cent.
Besides, the regulator raised the margin-loan ratio to 1:1 to increase fund flow in the market and stop forced sale.
"The stock market regulator took one after another step to stop the market fall, but no initiative appeared to be effective to boost investors' confidence," he said.
Faruq Ahmad Siddiqi, former chairman of the securities regulator, said the market should be allowed to move freely.
"The market becomes stable nowhere based on supportive measures such as reduction of circuit breaker. The market's movement becomes slow at one stage of repeated supportive measures," Mr. Siddiqi said.
Mr Siddiqi said the market may see more corrections if frequent interferences are stopped.
"But, the stability will be visible at one stage. The regulator should not be too much worried following the index correction," said Mr Siddiqi, adding the regulator should also not be blamed for price correction.
He has laid importance on the regulatory measures to contain manipulation in the market.
The panic-stricken investors sold shares after the government announced conservative policies to tackle the ongoing energy crisis in the country, Mir Ariful Islam, managing director and CEO of the Sandhani Asset Management, told the FE.
However, Mr Ariful said that it is a global situation as the ongoing Russia-Ukraine war created uncertainties over the global economy.
The government made a set of decisions on Monday, including keeping diesel-run power plants shut, to reduce power generation costs.
Investors apprehended the market might lose further as various media reports warned about the upcoming risk to the country's economy, said a leading broker.
The foreign currency reserves dropped below $40 billion, hitting a two-year low, while local currency is depreciating against the dollar, which created a negative sentiment among the investors.
The jittery investors released their holdings after noticing that the heavyweight issues kept falling, putting pressure on the indices, he said.
"The investors are in a very tough situation as they are witnessing continuous erosion of their money," he said.
Stocks nosedived due to the heavy sell pressure by the panicked investors as the macroeconomic worries deepened riding on the global fuel crisis, according to International Leasing Securities.
The government has planned to go for an area-wise power cut across the country and is thinking of reducing office hours to cope with the power crisis, it said.
"These all created a bearish sentiment among the investors," said the stockbroker.
Turnover, the crucial indicator of the market, also dropped to two-month low and amounted to Tk 5.15 billion, which was 13 per cent lower than the previous day's tally of Tk 5.93 billion.
Two other indices also ended lower. The DS30 Index lost 31.73 points to close at 2,236 and the DSES Index plunged 16.61 points to finish at 1,359.
All the sectors faced heavy sales pressure, leading to the share price erosion of nearly 94 per cent stocks. Out of 382 issues traded on the day, 358 declined, 12 advanced and 12 unchanged.
Delta Life Insurance was the most-traded stock with shares worth Tk 357 million changing hands, followed by Beximco, Fortune Shoes, Grameenphone and Orion Infusions.
The Chittagong Stock Exchange (CSE) also ended sharply lower with the CSE All Share Price Index - CASPI -losing 242 points to settle at 18,281 and the Selective Categories Index - CSCX -shedding 146 points to close at 10,953.
Of the issues traded, 260 declined, 17 advanced and 20 issues remained unchanged on the CSE.
The port city's bourse traded 6.05 million shares and mutual fund units with turnover value worth Tk 136 million.
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