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DSE key index hits fresh 13-month low

'Weak macroeconomic cues hit investors' sentiment'

FE REPORT | July 28, 2022 00:00:00

Stocks plummeted Wednesday, after two-day rise, as panic-driven investors dumped their equities amid growing tension on the country's weak macroeconomic cues.

The market saw a sharp decline at opening and tried to recover after one hour but heavy sale pressure sent the index to the deep red, plunging below the 6,100-mark again.

Finally, DSEX, the prime index of Dhaka Stock Exchange (DSE), plunged 74.24 points or 1.21 per cent to settle at 6,038, the lowest in 13 months since June 16, 2021.

The market index shed 389 points in 10 trading days out of 12 after Eid vacation while the market-cap lost Tk 227 billion during the period under review.

Turnover, the important indicator of the market, also dropped to Tk 7.78 billion, which was 7.16 per cent lower than the previous day's tally of Tk 8.38 billion.

Market operators said the panic-stricken investors sold shares as they feared the market might lose further as various media reports warned about the upcoming risk to the country's economy.

The investors are worried about a number of macroeconomic cues such as the energy crisis, shrinking foreign currency reserves, depreciating local currency and high inflationary pressure, said a merchant banker, requesting anonymity.

The market has been struggling for the past few months since the Russia-Ukraine war began while the rumours that the reserve of the country's fuel oil is running fast created a panic among the investors, he said.

Many people are trying to compare Bangladesh with Sri Lanka and Pakistan but no one is taking the global situation that the currency value of many countries also decreased against the dollar, he said.

The jittery investors continued to dump equities riding on the fear of global economic slowdown that led to a bleak economic outlook for the country as well, said EBL Securities.

The rising tension regarding the country's weak macroeconomic cues while the IMF forecasts gloomy and uncertain world economic outlook due to escalating inflation in the major economies, said the stockbroker.

In addition, the International Monetary Fund's concern regarding the misclassification in reporting the country's foreign exchange reserve has also spiraled investors' concerns, said the stockbroker.

The securities regulator tried to boost investors' confidence and some institutional investors were active in the market in the past two days, but failed to sustain the momentum, said a leading broker.

International Leasing Securities said the investors are suffering from a confidence crisis amid a lack of clear direction of the capital market exposure issues of banks.

Two other indices also slumped. The DS30 index, comprising blue chips, plunged 27.17 points to finish at 2,162 and the DSE Shariah Index (DSES) lost 14.13 points to close at 1,319.

All the sectors faced heavy sales pressure, leading to the share price erosion of about 89 per cent stocks. Out of 380 issues traded, 338 declined, 17 advanced and 25 issues remained unchanged on the DSE.

KDS Accessories was the most-traded stock with shares worth Tk 301 million changing hands, followed by Matin Spinning (271 million), Beximco (Tk 264 million), Square Textile (Tk 167 million) and Kattali Textile (Tk 149 million).

Phoenix Finance 1st Mutual Fund was the day's top gainer, posting a 6.48 per cent gain while Alltex Industries was the worst loser, losing 2.0 per cent.

The Chittagong Stock Exchange (CSE) also plummeted with the CSE All Share Price Index - CASPI -shedding 170 points to settle at 17,801 and the Selective Categories Index - CSCX -plunging 102 points to close at 10,665.

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