The benchmark equity index continued its downward spiral, plunging to its lowest level in more than four months this week, as jittery investors weighed the impacts of the policy rate hike amid economic slowdown.
It is the fifth straight week of losses for the benchmark DSEX index of Dhaka Stock Exchange (DSE).
The investors have long been suffering from a confidence crisis and their sentiment was further impacted by the prospect of interest rate hikes after the central bank this week raised the policy rate by 50 basis points to 10 per cent in a move to contain inflation.
This increase in the borrowing interest rate at which Bangladesh Bank lends to commercial banks is expected to drive up overall borrowing costs.
Higher interest rates have already made fixed-income instruments more attractive compared to stock market investments, while the potential for further rate hikes has exacerbated the market situation.
Moreover, a series of strict regulatory measures also dampened the investor sentiment, contributing to the ongoing market plunge.
Of the five trading sessions this week, the market suffered losses in three days while two others managed to eke out gains amid ongoing macroeconomic challenges.
The DSEX finally ended the week at 5,115, losing more than 143 points or 2.73 per cent. This is the lowest level of index since June 12 when the DSEX hit 5,083. The index lost an aggregate 616 points in the past five straight weeks.
As the blue-chip issues and mutational stocks kept falling over past few weeks, worried investors rushed to offload their holdings, putting further pressure on the indices.
Seven large-cap stocks -- Square Pharma, Grameenphone, BRAC Bank, British American Tobacco, National Bank, Robi and Olympic Industries -- together accounted for 56 points of the index's decline during the week, according to EBL Securities.
This week, Tk 123 billion was wiped out from the market capitalisation of the DSE, which now stands at Tk 6,568 billion. Over the past five consecutive weeks, the market capitalisation shed a total of Tk 365 billion.
The market-cap is calculated by multiplying the total number of a company's outstanding shares by the current market price.
The blue-chip DS30 index, a group of 30 prominent companies, also lost 51 points to close at 1,879 while the DSES index, which represents Shariah-based companies, fell 30 points to 1,144.
"Stocks plunged further this week to extend its prolonged losing streak as investors' pessimistic sentiment regarding the market momentum continued to dominate across the trading floor," said EBL Securities.
Despite ongoing regulatory meetings with different stakeholders to improve investors' confidence, the recent policy rate hike and political uncertainty further exacerbated investors' bearish market sentiment and ignited the selling spree, said the stockbroker.
Moreover, macroeconomic and regulatory uncertainties acted as negative catalysts that ignited the selling spree, allowing the bears to retain control for a prolonged period.
Turnover, a crucial indicator of the market, rose to Tk 16.93 billion this week, as against Tk 12.72 billion in the week before as this week saw five trading days instead of previous week's four.
Subsequently, the average daily turnover reached Tk 3.38 billion, up 6.5 per cent from the previous week's average of Tk 3.18 billion.
Investors were mostly active in the banking sector, which accounted for 23 per cent of the week's total turnover, followed by pharma sector (16 per cent) and food (11 per cent).
More than 72 per cent traded stocks saw price erosion, as out of 396 issues traded, 306 declined and 63 advanced while 27 remained unchanged.
All the sectors faced selling pressures and closed in the red. Among the major sectors, telecom saw the highest correction of 5.84 per cent. It was followed by food, engineering, power, pharma, banking and non-bank financial institutions.
Lovello Ice-cream was the most-traded stock with shares worth Tk 1.4 billion changing hands, closely followed by Agni Systems, NRB Bank, Square Pharma and Grameenpohone.
The Chittagong Stock Exchange (CSE) also tumbled, with the CSE All Share Price Index (CASPI) shedding 519 points to settle at 14,302 and its Selective Categories Index (CSCX) losing 307 points to 8,705.
The port-city bourse traded 10.74 million shares and mutual fund units with turnover value of Tk 333 million.
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