Stocks suffered a big jolt on Sunday as jittery investors went on a heavy sell-off of large-cap shares owing to prevailing political, regulatory, and banking sector uncertainties.
Market analysts said investors dumped their holdings to escape further losses in the absence of any strong catalyst, while the proposed merger of five Islamic banks and new margin rules exacerbated market conditions.
The news that the shares of the five troubled banks were nullified dampened investor sentiment, said Md Sajedul Islam, managing director of Shyamol Equity Management.
The market value of the shares is estimated at more than Tk 13 billion, but it is considered zero since the banks are weighed down by significant negative net asset value.
"Persistent political uncertainty, the ongoing financial sector instability, and panic-driven sell-offs intensified the market plunge," said Mr Islam.
Mr Islam explained that the sell pressure from subsidiaries of the Shariah-compliant banks undergoing merger had also dragged the market down.
Concerns over a potential slowdown in business activity ahead of the anticipated political transition were another reason behind investor pessimism.
Meanwhile, the stock market regulator approved new margin rules tightening lending, aimed at strengthening market discipline. The new rules came into effect on Sunday.
Sell pressure intensified on debt consolidation as the new margin rules require adjustments in old marginable portfolios within six months.
As per the new provisions, borrowers' portfolios will come under "forced sale" if their investment value is reduced by half, which was 75 per cent previously.
No one can get a margin loan with an investment of less than Tk 0.5 million, and securities on the 
Alternative Trading Board, SME board, and OTC companies will not be marginable.
Only 'A' category and 'B' category stocks of companies that have paid at least 5 per cent annual cash dividends will qualify for margin loans.
The single loan exposure is Tk 100 million or 15 per cent of the lender's net worth, whichever is lower.
On Sunday, the market witnessed a steep fall from the beginning of the session as investors, particularly retail ones, went on panic sales, taking the index below the 4,900 mark.
The DSEX, the prime index of the Dhaka Stock Exchange (DSE), lost 68 points, or 1.37 per cent, to settle at 4,899 - the lowest since July 3 this year. The index lost 223 points in the past six consecutive sessions, while the market cap shed Tk 144 billion during the period.
EBL Securities said the negative sentiment continued to prevail as investor pessimism deepened amid banking sector uncertainties. Lingering political worries surrounding the forthcoming national election only added to the situation.
The DS30 index, a group of 30 prominent companies, also lost 12 points to 1,928, while the DSES index, which represents Shariah-based companies, shed 16 points to 1,022.
Market liquidity remained subdued as Sunday's turnover - Tk 4.02 billion - was lower than that of the day before - Tk 4.20 billion.
Major sectors suffered losses.
The non-bank financial institutions witnessed a collective erosion
of 2.43 per cent, followed by banking, engineering, power, telecom, pharma, and food & allied sectors.
Losers outnumbered gainers, as out of the 390 issues traded, 329 saw price corrections, while 34 gained and 27 issues remained unchanged on the DSE floor.
Summit Alliance Port, which lost 3 per cent, was the most traded stock, with shares worth Tk 270 million changing hands, closely followed by Anwar Galvanizing, Monospool Bangladesh, Bangladesh Shipping Corporation, and Orion Infusion.
The Chittagong Stock Exchange also ended lower, with its All Shares Price Index (CASPI) losing 75 points to 13,883, while the Selective Categories Index (CSCX) lost 36 points to 8,579.
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