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Macroeconomic worries hit stocks

Block trade accounts for 20pc of total turnover

FE REPORT | June 21, 2022 00:00:00

The prime index of Dhaka Stock Exchange (DSEX) slumped below 6,400-mark Monday, hitting a four-week low, as investors dumped their holdings amid macroeconomic woes.

The risk-averse investors went for selling shares from the beginning of the session amid soaring inflation news while worsening flood situation in the country's north-eastern regions hit investors' sentiment.

DSEX, the core index of the Dhaka Stock Exchange, went down by 49.08 points or 0.76 per cent to settle at 6,357, lowest in the four weeks since May 26. DSEX shed over 68 points in the past two consecutive sessions.

Turnover, the crucial indicator of the market, also dropped to Tk 8.22 billion, which was 8.15 per cent lower than the previous day's tally of Tk 8.95 billion.

Block trade contributed nearly 20 per cent to the total turnover as trading of 44 companies worth Tk 1.60 billion were executed on the block trade board where stocks like Eastern Bank (Tk 763 million), Anwar Galvanizing (174 million), Bank Asia (Tk 139 million), Orion Pharma (Tk 139 million) and Renata (Tk 100 million) dominated the block trade board.

Market insiders said investors went for selling shares amid growing tension over the country's macroeconomic situation fueled by Russia- Ukraine war and global commodity price instability.

Investors were assessing the possible impacts of rising inflation while the volatile foreign exchange market, record trade deficit and external debts on the economy made them worried, said a merchant banker, seeking anonymity.

Besides, the proposed budget failed to meet the expectation of the stock market investors as they found almost nothing in the budget for the market, he said.

The investor also feared the impact of the fresh wave of Covid-19 virus due to the rising trend of infected patients recently. At least 873 new Covid-19 cases were recorded in 24 hours until 8:00am Monday while the positivity rate jumped to 10.87 per cent.

"Many investors remained shaky amid the rising cost of living as inflation is rising fast while the soaring trend of Covid-19 patients made them worried," he said.

The risk-averse investors kept their selling spree on sector-specific issues as the inflation hit an eight-year high to 7.42 per cent in May, said International Leasing Securities.

Bearish sentiment fueled heavy sell-off emerged since investors were unnerved over the eight-year high inflation, according to EBL Securities.

"Investors' concerns loomed since foreign investors went in a selling mood on the backdrop of weakening local currency, while the prospect of monetary tightening by the central bank to tame rising inflation might further dent investors' confidence on the bourse," said the stockbroker.

Two other indices also ended lower. The DSE 30 Index, comprising blue chips, fell 15.37 points to finish at 2,314 and the DSE Shariah Index (DSES) lost 9.09 points to close at 1,388.

All sectors witnessed price erosion, sending prices of more than 85 per cent traded issues declined. Out of 382 issues traded, 325 declined, 36 advanced and 19 issues remained unchanged on the DSE trading floor.

Among the major sectors, cement saw the highest loss of 1.20 per cent, followed by financial institutions with 1.10 per cent, banking 0.80 per cent, power 0.80 per cent, telecom 0.70 per cent, food 0.60 per cent.

Beximco was the most-traded stocks with shares worth Tk 835 million changing hands, followed by JMI Hospital Requisite (Tk 421 million), Anwar Galvanizing (Tk 347 million), Bangladesh Shipping Corporation (Tk 343 million) and Shinepukur Ceramics (Tk 248 million).

Meghna Insurance was the top gainer, posting a 9.90 per cent gain while Asian Tiger Sandhani Life Growth Fund was the day's worst loser, losing 2.0 per cent.

The Chittagong Stock Exchange (CSE) also closed lower with the CSE All Share Price Index - CASPI -shedding 139 points to settle at 18,728 and the Selective Categories Index - CSCX - losing 83 points to close at 11,229.

Of the issues traded, 225 declined, 35 advanced and 27 issues remained unchanged on the CSE.

The port-city bourse traded 18.40 million shares and mutual fund units with turnover value worth nearly Tk 572 million.

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