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Stocks keep bleeding as economic worry grows

Turnover hits 16-month low, DSEX sinks below 6,200 mark

FE REPORT | July 20, 2022 00:00:00

An investor uses his mobile phone app to sell his holdings but, to his shock, finds no buyers on Tuesday as the benchmark equities index dropped 63.71 points on the Dhaka Stock Exchange. The photo was taken inside a brokerage house at Motijheel in the city. — FE photo

Stocks suffered another big fall on Tuesday as edgy investors continued to sell off their positions in a bid to exit the market, fearing that economic uncertainty would deepen in coming months.

The benchmark DSEX index of Dhaka Stock Exchange (DSE) slipped below 6,200 mark for the first time in two months and settled at 6,153, shedding 63.71 points or 1.02 per cent over the previous session.

In the past six days after the Eid vacation, the DSEX lost more than 213 points, with Tk 147 billion wiped out from the market capitalisation.

Turnover, a crucial indicator of the market, also slumped 38 per cent to Tk 3.19 billion, hitting a 16-month low, on the day as investors lost their buying appetite amidst the prolonged pessimism. It made the lowest single-day transactions since April 5, 2021, when the turnover totalled Tk 2.36 billion.

Market insiders said the ongoing global economic turmoil impacted the Bangladesh economy, which was reflected on the stock market.

Most investors were trying to exit the market by dumping their holdings as they worry about more economic challenges in the coming months, said a leading broker, seeking anonymity.

Most stocks saw no buyers as no scrip can fall by more than 2.0 per cent in a single day due to lower circuit limit.

The broker noted that the market has been struggling for the past few months since the Russia-Ukraine war began, which was exacerbated by the government's measures to save energy as a safeguard against the global economic instability.

The market outlook remains gloomy as investors are concerned about macroeconomic issues such as energy crisis, inflationary pressure and depreciating local currency, he added.

The jittery investors went on a heavy sell-off as they fear deepening challenges in the coming months due to the energy crisis, said International Leasing Securities.

"Some of the investors are stuck with heavy losses in their portfolios and cannot get out of it," said the stockbroker.

The investors were unnerved after the government unveiled conservative policies on the backdrop of pressure on the country's foreign exchange reserve and rising inflation, said EBL Securities.

"Investors were cautious owing to the market's persistent pessimism, which was exacerbated by media reports that inflation in June, hitting nine-month high," said the stockbroker.

Inflation in Bangladesh hit a nine-year high of 7.56 per cent in June thanks to the spiralling prices of food products in the country.

Two other DSE indices also ended lower on the day. The DS30 index, comprising blue chips, shed 22.60 points to finish at 2,213 and the DSE Shariah Index (DSES) lost 11.57 points to close at 1,348.

All the sectors faced selling pressures, leading to the price erosion of more than 90 per cent stocks. Out of 382 issues traded, 344 declined, 21 advanced and 17 remained unchanged.

However, junk stocks kept gaining and dominated the top gainers' chart although the heavyweight stocks kept losing.

The scam-hit Bangladesh Industrial Finance Company was the top gainer, soaring 8.22 per cent, followed by Mithun Knitting & Dyeing which surged 6.56 per cent while BD Lamps was the worst loser, shedding 2.0 per cent.

All the major sectors suffered losses, with the financial intuition sector losing the most (1.70 per cent), followed by food (1.40 per cent), textile (1.40 per cent), telecoms (1.30 per cent), power (1.30 per cent), and banking sector (0.50 per cent).

The Chittagong Stock Exchange (CSE) also ended sharply lower, with the CSE All Share Price Index (CASPI) losing 214 points to settle at 18,066 and the Selective Categories Index (CSCX) shedding 129 points to close at 10,824.

Of the issues traded, 246 declined, 19 advanced and 21 issues remained unchanged on the CSE.

The port city's bourse traded 5.91 million shares and mutual fund units with turnover value worth Tk 117 million.

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