The benchmark equity index shed 2.36 per cent on Wednesday, registering its biggest single-day fall in the last 31 months, with most stocks experiencing the price erosion.
Such a free fall of the market prompted aggrieved investors to stage a demonstration in front of the Dhaka Stock Exchange (DSE) office at Motijheel.
According to experts, a record penalty imposed by the securities regulator on the Beximco's share price manipulators, combined with escalating tensions in the Middle East, following Iran's missile attacks on Israel, contributed to the market decline.
Price corrections witnessed by blue-chip stocks largely intensified the day's fall and the key index of the DSE extended its losing streak for a third consecutive session.
The top 10 index draggers, nine of which were blue-chip stocks, wiped out 56.7 points from the benchmark DSEX index. Islami Bank Bangladesh alone accounted for a 13-point fall in the index.
The other top index draggers include Beximco Pharma, British American Tobacco Bangladesh, Olympic Industries, Grameenphone and BRAC Bank.
Finally, the DSEX settled 2.36 per cent or 132.29 points lower at Tk 5453.99 points. It was the biggest single-day fall after March 9, 2022 when the DSEX dropped 2.41 per cent.
Md. Ashequr Rahman, managing director of Midway Securities, said tensions built among prudent investors in response to the escalating situation in the Middle East are is quite rational.
But it's quite irrational if the market faces any impact of the regulatory actions taken against the manipulators, he argued.
Describing it as 'funny', Mr Rahman noted that due to longstanding ill practices in the market, investors often react negatively to measures intended to enforce discipline in the market.
The market opened the session on a negative note, with the DSEX losing 117 points within the first hour as panic-driven investors began selling aggressively.
After the mid-session, a brief recovery was observed, but it quickly faded, leading to the broad index recording its largest single-day decline in 31 months.
The DSEX lost a total of 205 points in the last three consecutive sessions.
Of 30 blue-chip stocks, 28 shed up to 9.41 per cent of their prices while prices of two other companies, Beximco and Square Pharma, remained unchanged.
The blue-chip DS30 index declined 2.51 per cent or 51.32 points to close at 1988.88 points.
Of 398 issues traded, 347 declined and only 29 gained while 22 others remained unchanged.
The chief executive officer (CEO) of a leading brokerage firm, who declined to be named, said that the fundamental bases of most listed companies are very weak.
He noted that the market for these weak companies is primarily driven by manipulation. The recent regulatory action against manipulators sends a clear message to market players.
This is why the market experienced a sharp decline on Wednesday, a day after the securities regulator imposed a record penalty of Tk 4.28 billion on nine manipulators for inflating Beximco share prices in 2021 and 2022, he said.
"The market remained sell-dominant throughout the session as jittery investors opted to liquidate their holdings to avoid further capital erosion in their already hampered portfolios," said a market review of EBL Securities.
Managing Director of Midway Securities Md. Ashequr Rahman said some stocks, including Bangladesh Shipping Corporation (BSC), witnessed significant trade volumes amid sharp price corrections.
The trading volumes indicate that some prudent investors took fresh positions in those stocks capitalising on the price decline, he said.
On Wednesday, all sectors of listed securities on the DSE experienced a decline in market capitalisation ranging from 1.3 per cent to 5.4 per cent.
Fu Wang Food was the day's worst loser, shedding 9.92 per cent to close at Tk 11.8 each.
On the other hand, Desh Garments was the top gainer, rising 9.95 per cent to close at Tk 77.30 each.
The Chittagong Stock Exchange (CSE) also closed lower. CASPI, the benchmark index of CSE, declined 1.96 per cent or 306 points to close at 15,291 points.
Of 216 issues traded, 24 advanced, 177 declined and 15 remained unchanged, with a turnover of Tk 59.64 million.
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