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Stocks plunge despite thin selling pressure

FE REPORT | July 25, 2024 00:00:00


Investors could trade in stocks on Wednesday only from brokerage houses due to limited accessibility of Internet. Mobile Internet connections remained suspended while broadband Internet was resumed. The photo was taken at a brokerage firm in the capital's Motijheel.

Stocks plunged on Wednesday dragging the prime index by 96 points to 5,351, lowest in three weeks, but investor participation was remarkably thin leading to a one-and-a-half-year-low turnover on the Dhaka bourse.

Transactions on the Dhaka Stock Exchange (DSE) were worth Tk 1.59 billion, down 57 per cent from the previous session on July 18.

Shorter trading time -- from 11:00pm to 2:00pm, coupled with limited Internet access were crucial factors behind the low turnover. Besides, investors were reluctant to inject fresh funds in stocks, worrying about economic setbacks amid curfew imposed following street violence over quota-reform protests, market analysts said.

"The recent unrest and subsequent ongoing nationwide curfew might have hit investors' sentiment," said Md Sajedul Islam, managing director of Shyamol Equity Management.

"Low turnover also indicates that investors are not interested in selling shares at this low price level, which is good for the market."

Mr Islam, however, expected the market to rebound in the coming week as the wheels of the economy start rolling and normality is expected to return.

Trading on the bourses resumed on Wednesday after a three-day general holiday, aligned with the reopening of banks, following the restoration of broadband internet connections. The country underwent a complete internet blackout for five days since Thursday last week.

The general holiday had been announced amid unrest and curfew enforced by the government since Friday midnight as anti-quota protests and violence spread across the country, leaving around 196 people dead.

On Wednesday, all 291 brokers were able to connect to the DSE server without trouble when the market reopened after three days' closure, said a DSE official.

However, investors, who trade through mobile phones, failed to participate in stock trading since mobile internet connections remained suspended.

"Some branch offices of brokerage houses in the divisional areas also could not execute trades due to internet disruptions," said the DSE official preferring anonymity.

"The stock market witnessed lackluster trading since most investors remained reluctant to actively participate in the market, being apprehensive of the prevailing unrest and curfew that affected investor sentiment," said EBL Securities in a market review.

The blue-chip index DS30, a group of 30 prominent companies, lost more than 37 points to 1,908 while the DSES index, which represents Shariah-based companies, shed 22 points to 1,69.

Blue-chip stocks, which are seen as relatively safer investments with a proven track record of success and a stable growth even in adverse business environments, saw huge sell-offs by panicked investors.

Subsequently, all but one blue chip stocks ended in the red, with Square Pharma, BAT Bangladesh, Renata, Beximco Pharma and BRAC Bank jointly accounting for nearly one-third index fall on Wednesday.

Square Pharmaceuticals, which is considered one of the best performing blue-chip stocks, with an excellent business reputation, experienced a 1.6 per cent correction, contributing more than 9-point index fall alone.

BAT Bangladesh, the fourth largest stock in terms of market capitalisation, also lost 2.3 per cent, rendering a 5-point index erosion.

More than 91 per cent traded stocks saw price erosion. Of the 390 issues traded, only 20 managed to close in the green zone while 355 ended in the red with 15 remaining unchanged on the Dhaka bourse.

The pharmaceutical sector kept its dominance in the turnover chart, accounting for 22 per cent of the day's total turnover, followed by banks' 13.4 per cent and food sector's 12.5 per cent.

Large-cap sectors showed negative performance. Non-bank financial institutions experienced the highest loss of 2.73 per cent, followed by engineering 2.56 per cent, pharmaceutical 1.98 per cent, food 1.94 per cent, power 1.90 per cent, telecom 1.58 per cent and banking 1.28 per cent.

Libra Infusion became the most-traded stocks with shares worth Tk 52 million changing hands, closely followed by BRAC Bank, Grameephone, Agni System and BAT Bangladesh.

Newly listed Techno Drugs was the top gainer, rising 10 per cent, while Kohinoor Chemicals was the worst loser, losing 3 per cent.

The Chittagong Stock Exchange also ended sharply lower, with its All Shares Price Index (CASPI) shedding 207 points to 15,359 and the Selective Categories Index (CSCX) losing 127 points to 9,244.

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