Political tension hits stock prices hard

Stocks fell further last week that ended Thursday, with prime index of the Dhaka Stock Exchange (DSE), hitting fresh 18-month low as investors continued selling spree, fearing further fall of stock prices.
“Fear of political unrest has cast a dark shadow over the market again, which is gradually absorbing the liquidity and vitality of the market,” said an analyst, seeking anonymity.
The week featured four trading sessions instead of five as the market was closed Tuesday due to City Corporation Election. Of those, the market slumped three sessions while one saw marginal gain.
Week-on-week, DSEX, the prime index of the DSE, came down below the 4,100-mark and closed the week at 18-month low of 4,047.29 points, plunging 144.92 points or 3.46 per cent.
DSEX suffered a loss of around 483 points or 10.67 per cent in April, and the market is currently standing around its major ‘psychological’ support level of 4,000.
The two other indices also saw sharp decline. The DS30 index, comprising blue chips shed 47.57 points or 2.99 per cent to close at 1,545.19 points. The DSE Shariah Index wiped out 32.34 points or 3.16 per cent to close at 992.54 points.
The port city bourse Chittagong Stock Exchange (CSE) also saw steep fall, with its Selective Categories Index - CSCX – plunged 266.02 points or 3.40 per cent to close the week at 7,548.98 points.
Turnover, the most important indicator for the market, also dropped sharply despite one new issue -- BSRM started trading on the DSE last week. The total turnover for the week stood at Tk 13.63 billion against Tk 23.66 billion the week before.
The daily turnover for the week averaged Tk 3.40 billion, registering a decline of 28 per cent over the previous week’s average of Tk 4.73 billion.
The investors’ activity was mostly focused on power, pharma and engineering – the sectors accounted for 26 per cent, 20 per cent and 16 per cent respectively of the week’s total turnover.
LankaBangla Securities, a stock broker, said, “Market passed yet another gloomy week as investors remained concerned about the political outlook of the country after city corporation election”.
“The market witnessed lacklustre trading last week amid the shaky investors’ confidence,” said International Leasing Securities, a stock broker, in its weekly analysis.
“The market participants remained in the selling mood as they were speculating probable deterioration in the country’s political front”.
The average market turnover also plunged last week as most of the big and institutional investors kept them aside of the market in this bearish momentum, said the International Leasing.
IDLC Investments, merchant bank, said, “The week started in the backdrop catastrophic earthquake in neighbouring country as well as heating up of local political frontier”.
“In such demoralizing situation market also failed to revive investors’ sentiment,” it noted.
The merchant bank also said, “As city corporation election passed without any indication of sustainable political calm, investors remained pessimistic throughout the week. Over the time, market entered into a snowballing movement where a fall called for further fall”.
All the large-cap sectors retraced during the week, except food and allied, which advanced by 2.82 per cent.
NBFIs registered the highest loss of 10.11 per cent. Power lost a hefty by 5.08 per cent. Pharmaceuticals went down by 2.98 per cent. Banks retracted by 1.49 per cent. Cement and telecommunication also went down 1.65 per cent and 0.73 per cent respectively.
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