Stocks ended lower on Sunday, the first session after unveiling the national budget, as the proposed budget appears to have failed to boost stock investors' confidence.
The market index began to slide steeply from the beginning of the session, as large-cap stocks faced erosion, eventually ending more than 48 points lower.
DSEX, the prime index of the Dhaka Stock Exchange (DSE), went down by 48.84 points or 0.75 per cent to settle at 6,431.
Finance Minister AHM Mustafa Kamal placed a record Tk 6.78 trillion national budget for the fiscal year (FY) 2022-23 before the parliament on Thursday.
The Finance Minister has proposed no new incentives, other than the reduction in corporate tax for the listed companies with some conditions.
The minister proposed a tax rate of 20 per cent in place of existing 22.5 per cent for listed firms that issue shares worth more than 10 per cent of its paid-up capital through IPO on condition that all receipts and income must be transacted through bank transfer.
However, the tax rate would be 22.5 per cent for a listed firm that issue share worth 10 per cent or less than 10 per cent of its paid-up capital through IPO.
Besides, the tax rate would be 25 per cent instead of 22.5 per cent if the company fails to comply with the conditions, according to the budget proposal.
The tax gap between listed and non-listed firms remained, however, unchanged at 7.50 per cent, which analysts think would discourage non-listed firms from going public.
Market insiders said investors reacted negatively to the proposed budget as the budget proposed conditional tax reduction on listed companies.
The stock market intermediaries have long been demanding for widening the tax gap at least 10 per cent between listed and non-listed firms to attract well-performing firms into the market, said a leading broker.
He said that they made a set of demands including the continuation of money whitening scope through capital market but the proposed budget discontinued it.
The investors offloaded shares since the fear of tighter financial conditions across the globe has unleashed significant volatilities on equities in the country, according to EBL Securities.
The investors are analysing the potential impacts on the capital market with caution before making any more investments, said the stockbroker.
Meanwhile, firms that floated 10 per cent or less than 10 per cent shares in the market faced corrections as they would not get tax benefit as per condition in the proposed budget.
Walton, Berger Paints and United Power faced 0.96 per cent, 0.23 per cent and 0.04 per cent corrections on Sunday as they floated less than 10 per cent shares.
Two other indices also ended lower. The DSE 30 Index, comprising blue chips, fell 17.73 points to close at 2,334 and the DSE Shariah Index (DSES) lost 10.66 points to settle at 1,403.
Turnover, the crucial indicator of the market, also dropped to Tk 6.36 billion, which was 16 per cent lower than the previous day's tally of Tk 7.58 billion.
Out of the 378 issues traded, 306 declined, 53 advanced and 19 issues remained unchanged.
Shinepukur Ceramics was the most traded stock with shares worth Tk 398 million changing hands, followed by Beximco (Tk 287 million), BDCOM Online (Tk 202 million), IPDC Finance (Tk 174 million) and Bangladesh Shipping Corporation (Tk 151 million).
Newly listed Meghna Insurance was the day's top gainer, posting a 9.91 per cent gain further while Summit Alliance Port was the worst loser, losing 2.0 per cent.
The Chittagong Stock Exchange (CSE) ended lower with the CSE All Share Price Index - CASPI -losing 134 points to settle at 18,891 and the Selective Categories Index - CSCX, shed 81 points to close at 11,329.
Of the issues traded, 226 declined, 49 advanced and 26 remained unchanged on the CSE.
The port city's bourse traded 9.19 million shares and mutual fund units with a turnover value of Tk 200 million.
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