Stocks nosedived on Sunday, the first session after unveiling the national budget for fiscal year 2018-19, as investors reacted negatively to the proposed budget.
DSEX, the benchmark index of Dhaka Stock Exchange (DSE), settled at 5,323, slumping by 43.37 points or 0.80 per cent over the previous session.
Market insiders said investors were frustrated as the budget offered hardly any specific direction on the capital market, excepting a cut in the corporate tax rates for listed banks and financial institutions.
Most of the listed companies are from other sectors. So, this tax incentive would not have a big impact on the market, they said.
"The budget did not focus on the capital market as per our expectations," CSE Managing Director M. Shaifur Rahman Mazumdar told a post-budget press briefing in Dhaka on Sunday.
The country's capital market is currently witnessing a liquidity crisis as well as a bearish trend.
"Considering the present market scenario, exempting only Tk 25,000 on dividend income from tax was very discouraging for the small investors," Mahbub Hossain, an investor told the FE.
The investors have long been demanding for increasing the ceiling of tax-free dividend income to Tk 100,000 from existing Tk 25,000.
"The investors had anticipated a specific direction about the capital market, but there was nothing except the corporate tax cut for listed banks and financial institutions, which disappointed investors," said an analyst.
"The market nosedived amid frustration among the investors," commented International Leasing Securities.
The market started on a negative note and continued till end of the session with no sign of reversal, finally ending more than 43 points lower.
Two other indices of the premier bourse also ended lower. The DS30 index, comprising blue chips, fell sharply by 24 points to finish at 1,954 points and DSES (Shariah) lost more than 8.0 points to close at 1,229 points.
Bearish sentiment also reflected on the trading activities as total turnover on the DSE came down to Tk 4.08 billion, which is 10 per cent lower than the previous day's Tk 4.54 billion.
Among the major sectors, banking suffered the most, losing 1.40 per cent, despite the corporate tax cut by 2.5 per cent in the proposed budget.
The financial institutions also lost 1.20 per cent, followed by telecommunication with 1.0 per cent, pharmaceuticals 0.20 per cent and engineering 0.10 per cent.
Food & allied gained 0.50 per cent while power sector closed flat. The losers took a strong lead over the gainers as out of 335 issues traded, 189 closed lower, 107 closed higher and 39 remained unchanged on the DSE trading floor.
United Power topped the DSE turnover chart with shares worth Tk 188 million changing hands, closely followed by Monno Ceramic Industries, Berger Paints, Pharma Aid and Beximco.
The port city's bourse CSE also closed lower with its CSE All Share Price Index - CAPSI- shedding 132 points to settle at 16,417 and Selective Categories Index - CSCX - falling 83 points to finish at 9,928 points.
Here too, the losers beat the gainers as 137 issues closed lower, 65 higher and 19 remained unchanged.
The port city bourse traded 5.89 million shares and mutual fund units worth more than Tk 357 million in turnover.
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