DSE turnover hits two-month low as investors turn cautious

Turnover on the Dhaka Stock Exchange (DSE) tumbled to a two-month low on Sunday as investors refrained from making fresh investments amid energy-related concerns and heightened geopolitical tensions.
Market turnover -- a key indicator of investor participation -- fell 17 per cent to Tk 7.80 billion from Tk 9.39 billion in the previous session, marking the lowest single-day turnover since May 24 this year.
The sharp decline suggests that investors are becoming increasingly cautious after the market's strong rally in recent weeks, said a leading broker.
The market remained volatile throughout the day, with investors active on both the buying and selling sides. However, late-hour corrections in several large-cap stocks dragged the benchmark index deeper into negative territory.
Subsequently, the prime index of the DSE extended its losing streak for the three straight sessions, falling below the 5,800-point threshold after 12 trading days.
The broad index finally fell nearly 20 points, or 0.34 per cent, to close at 5,784, taking its cumulative decline to 114 points over the past three trading days while market-cap shed nearly Tk 87 billion during the time.
According to EBL Securities, lingering concerns over gas supply disruptions and heightened geopolitical tensions prompted cautious stance among market participants, while persistent anxiety over the margin rules amendment also weighed on overall market sentiment.
Despite the overall bearish mood, insurance stocks witnessed selective buying following strong corporate earnings announcements, supporting gains in the sector. Nevertheless, broad-based profit-taking in most sectors outweighed those advances, said the stockbroker.
Domestic's industrial sector is taking a heavy hit from the worsening gas crisis, which is raising operating costs and threatening the country's export competitiveness.
Gas-dependent sectors, including textiles, spinning and ceramics, are operating below capacity or facing production delays due to low gas supply and weak pipeline pressure, according to media reports on Sunday.
Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) last week published draft amendments to the Margin Rules, seeking to strengthen risk management and improve governance in the capital market after years of excessive leverage and weaknesses in margin lending practices.
However, the proposed changes have raised concerns among investors.
Under the draft rules, banks and non-bank financial institutions with a price-to-book (P/B) ratio above three and insurance companies with a P/B ratio above one would no longer qualify for margin loans.
Since margin loans enable investors to buy shares with borrowed funds, the proposal could reduce leveraged demand for many banking and insurance stocks if implemented in its current form.
"The market is now waiting for the final version of the margin rules," said a leading broker, adding that external factors, especially renewed tensions in the Middle East, have also weakened risk appetite.
As a result, selling pressure spread across most major sectors, including non-bank financial institutions, power, pharmaceuticals, engineering and banking as investors booked profits after weeks of gains.
Heavyweight stocks also weighed on the benchmark index. City Bank, Square Pharmaceuticals, Prime Bank, LafargeHolcim and BSRM together accounted for nearly one-third of the day's decline in the DSEX.
The blue-chip DS30 Index lost more than 6 points to close at 2,186, while the DSES Index, which tracks Shariah-compliant companies, fell more than 5 points to 1,177.
Market breadth remained firmly negative, underscoring the broad-based nature of the sell-off. Of the 389 issues traded on the DSE, 240 declined, 116 advanced and 33 remained unchanged.
Summit Alliance Port topped the turnover chart with shares worth Tk 276 million changing hands. It was followed by ML Dyeing, IT Consultants, IPDC Finance and Dragon Sweater.
Bangladesh National Insurance Company was the best performer, gaining 9.96 per cent while CAPM IBBL Mutual Fund was the worst loser, losing 9.02 per cent.
The Chittagong Stock Exchange (CSE) also ended lower. Its All Share Price Index (CASPI) dropped 142 points to 15,478, while the Selective Categories Index (CSCX) shed 92 points to finish at 9,444.

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