Stocks endured yet another tumultuous week, marked by a sharp decline in the benchmark index of Dhaka Stock Exchange (DSE) as both local and foreign investors remained engaged in a flurry of sell-offs to shield their investments from further erosion.
This is the seventh week that the stocks continued their retreat, shedding a cumulative 596 points in the past seven consecutive weeks to Thursday.
Market analysts attribute this decline to a prevailing sentiment among investors to divest from equities that had remained stagnant due to the 'floor price' restrictions for a prolonged period.
This week, the market saw four trading days as Tuesday was a public holiday on the occasion of Independence Day. The first three days saw a huge fall, followed by a modest uptick on the final trading day.
The benchmark DSEX index finally settled 163 points or 2.75 per cent lower at 5,778. This marked the biggest weekly fall in less than two months.
Top index draggers were Renata, BAT Bangladesh, Beacon Pharma, LafargeHolcim and Brac Bank as they jointly accounted for more than 53 points of the weekly index fall.
Bears have gripped the market since the withdrawal of 'floor prices' from the largest and second largest stocks in terms of market-cap -- Grameephone and BAT -- while lifting of 'floor price' for another large-cap company, Robi Axiata, exacerbated the market condition.
The substantial erosion in the prices of large-cap stocks has wiped out more than Tk 1 trillion from Dhaka bourse's market capitalisation.
Many stocks had been untradeable for more than 18 months. Once the Bangladesh Securities and Exchange Commission (BSEC) began removing the price cap from January this year, investors finally got the chance to offload shares.
"Some investors needed liquidity but their funds remained stuck. They are now in a selling mood," said a merchant banker, requesting not to be named.
Additionally, the escalating deposit rates within the banking sector and the attractive returns offered by Treasury bonds are prompting investors to divert funds towards the money market.
Besides, the increasing deposit rates in the banking sector and high returns offered by Treasury bonds are prompting investors to divert funds towards the money market.
Moreover, foreign investors have been selling shares as they fear that the local currency may weaken further against the greenback.
Jittery investors sold off major sector stocks, with the engineering sector taking a big hit, losing 6.4 per cent, followed by non-bank financial institutions, general insurance, textile, and telecom and banking sectors.
According to EBL Securities, stocks failed to hold onto the revival spirit as the market turned back to its bearish vibe since selling pressure continued to dominate the trading board for the majority of the week owing to the enduring pessimism pervading across the trading floor.
Two other DSE indices also ended lower. The DSE 30 index, comprising blue chips, plunged more than 46 points to finish at 2,011 and the DSE Shariah Index (DSES) fell 38 points to 1,254.
Investor participation in the market continued to wane, as total turnover stood at Tk 19.76 billion this week as against Tk 19.86 billion in the week before. Both the weeks saw four trading days instead of the regular five days.
Accordingly, the average daily turnover stood at Tk 4.94 billion, which was 0.5 per cent lower than the previous week's average of Tk 4.96 billion.
More than 87 per cent traded stocks saw price fall, as out of 393 issues traded, 343 saw price corrections and 35 witnessed price appreciation while 15 remained unchanged on the DSE trading floor.
Investors were mostly active in the engineering sector, accounting for more than 20 per cent of the week's total turnover, followed by pharmaceuticals (14 per cent) and textile (11 per cent).
The newly listed Asiatic Laboratories became the most traded stock, with shares worth Tk 1.03 billion changing hands, followed by Central Pharmaceuticals, Best Holdings, Golden Son and Fu-Wang Ceramic.
Meghna Pet Industries, a junk stock, was the week's top gainer, posting a 9.9 per cent rise while Intech was the worst loser, shedding 16 per cent.
The Chittagong Stock Exchange also saw a sharp decline with its All Shares Price Index (CASPI) losing 384 points to 16,553 and the Selective Categories Index (CSCX) shedding 217 points to close at 9,951.
Of the issues traded, 243 declined, 48 advanced and 21 others remained unchanged on the CSE.
The port city bourse traded 20.08 million shares and mutual fund units, with turnover value reaching Tk 972 million.
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