The stock market witnessed a major setback on Monday, the first session after the Eid break, with the key index of the Dhaka bourse sinking below 5,800-mark once again.
Investor participation was very thin on the trading floor as most investors were yet to return to Dhaka after celebrating Eid in their village homes. But those, who participated in trading, opted to sell off holdings to avoid a further depletion of their asset value.
The market turnover fell to 3-month low to Tk 3.67 billion, a 17 per cent plunge from the previous session's tally of Tk 4.44 billion.
The market pulse shifted to correction mode again after a short-lived optimism, as investor confidence waned, market experts say.
"Retail investors sold their shares out of fear owing to Israel-Iran conflicts. This is a sensitive market, but I believe the market will bounce back soon," said Mohammad A Hafiz, former president of the Bangladesh Merchant Bankers Association (BMBA).
Investors were rattled on the trading floor, wary of the probable impact of the prevailing geopolitical crisis on the market's momentum, said EBL Securities, in its regular market analysis.
Most investors preferred to reduce their stock market exposure, owing to concerns over the market outlook, while some remained on the sidelines amid prevailing volatility, said the stockbroker.
Substantial price erosion of large-cap stocks dragged the key index of the Dhaka Stock Exchange (DSE) more than 85 points or 1.45 per cent to 5,778. The index had almost remained flat before the Eid vacation.
The fall of Beacon Pharma, BAT Bangladesh, National Bank, Square Pharmaceuticals, and BRAC Bank largely contributed to the Monday's market plunge. They jointly accounted for 25 points of the key index fall.
The blue chip index DS30, a group of 30 prominent companies, lost 17 points to 2,015 while the DSES index, which represents Shariah-based companies, shed 16 points to 1,266.
Saiful Islam, president of the DSE Brokers Association of Bangladesh, said panicked investors dumped their holdings after noticing that some heavyweight issues had kept falling in the previous few weeks.
The growing deposit rates in the banking sector and the higher return from Treasury bonds are also luring savers to the money market from the stock market.
The market has been suffering from a liquidity crisis for a long time amid a tightening of the money market.
Mr Islam said tensions in the Middle East after Iran's attack on Israel, heightening fears of a wider conflict in the volatile region, further diminished investors' interest and confidence in stocks.
As large-cap stocks started falling, investors became wary about further correction, triggering panic sale.
All the sectors faced selling pressure, leading to the erosion of more than 85 per cent stocks. Out of 395 issues traded, 336 declined, 32 advanced and 27 remained unchanged on the DSE trading floor.
Ceramic stocks saw the highest correction as the sector went down 4 per cent, driven by Shinepukur Ceramics that plunged almost 6 per cent. The other sectors that sustained major corrections were non-bank financial institutions, life insurance, textile, power, and food sectors.
Low-performing stocks dominated the turnover chart. Fu-Wang Ceramic was the most-traded stock, with shares worth Tk 142 million changing hands, followed by Malek Spinning Mills, Karnaphuli Insurance, Lovello ice-Cream, and Shinepukur Ceramics.
The Chittagong Stock Exchange also plunged with its All Shares Price Index (CASPI) shedding 198 points to 16,534 and the Selective Categories Index (CSCX) losing 119 points to 9,940.
Of the issues traded, 135 declined, 30 advanced and 14 others remained unchanged on the CSE.
The port city bourse traded 2.28 million shares and mutual fund units, leading to a turnover of Tk 88 million.
babulfexpress@gmail.com