Dhaka stocks dropped for the fourth day on Tuesday, hitting a 41-month low as prolonged bear run at the market and gloomy macroeconomic outlook compelled investors to sell off their holdings.
DSEX, the key index of Dhaka Stock Exchange, lost 0.59 per cent, or 26.81 points, to close at 4,506.93 points on Tuesday. The DSEX lost 197 points in last four sessions.
The index hit its lowest on Tuesday after 4,505.17 points on July 11, 2016.
Market operators said the DSEX gained around 40 points within 20 minutes of Tuesday’s session as some institutional investors went for buying shares to halt the relentless fall in share prices.
But the recovery was a short-lived one as investors continued selling shares to avoid further losses, they said.
Investors lost their confidence as the market continued plunging and they saw any sign of recovery, market operators said.
The DSEX lost more than 1,443 points in last 10 months, eroding Tk 77,000 crore in market capitalisation.
The steep fall in share prices re-emerged this week amid growing concern over the country’s economy as some of the economic indicators continued deteriorating in recent months.
A decline in the private sector credit growth to a nine year-low, negative export earnings for last four months, poor tax revenue collection and heavy government borrowing reflected the weak state of the country’s economy.
The recent media reports over slowing economy were enough to sour some optimism seen in the last couple of weeks, market operators said.
A continuing rise in the amount of defaulted loans became a paramount concern in the financial sector as no measures were able to halt the surge.
Banks’ defaulted loans swelled to Tk 1,16,288 crore with the addition of Tk 3,863 crore in defaulted loans in July-September.
The government also failed to reduce bank’s interest rate to single digit despite repeated attempts that increased cost of business.
The banks remained reluctant to invest in the capital market considering the overall market scenario.
Forced sales by the brokerage houses and foreign sales have worsened the current situation on the market.
Market operators said the continuing plunges in share prices reduced investment capacity of the market intermediaries and high net worth investors.
Investors lost confidence in the market regulators, they said.
Approval of fundamentally weak companies by the Bangladesh Securities and Exchange Commission, prevalence of market manipulations, absence of governance and poor regulatory control keep hammering the investors’ confidence, they said.
Therefore, some regulatory relaxations and incentives offered by the BSEC to the market intermediaries failed to change market scenario, they said.
EBL Securities in its daily market commentary said the investors’ confidence got a battering, hence their wait-and-see approach.
The average share prices of telecommunication sector dropped by 1.2 per cent, pharmaceutical 0.8 per cent, energy 0.4 per cent and non-bank financial institution 0.3 per cent.
Among the large capitalised companies, Grameenphone, Square Pharmaceuticals, British American Tobacco and United Power Generation Company slumped the most on Tuesday.
A 0.1-per cent rise in share prices of the bank sector saved the market from further fall.
The DSE on Tuesday sought appointments with finance minister AHM Mustafa Kamal and Bangladesh Bank governor Fazle Kabir to submit a set of proposals regarding the market development.
Turnover on the DSE increased to Tk 305.87 crore on Tuesday from Tk 275.29 crore in the previous day.
Out of the 343 scrips traded on Tuesday, 203 declined, 96 advanced and 54 remained unchanged.
DSE blue-chip index DS30 shed 0.84 per cent, or 13.13 points, to close at 1,548.37 points.
Shariah index DSES lost 0.97 per cent, or 9.97 points, to end at 1,012.29 points.
Square Pharmaceuticals led the turnover chart with its shares worth Tk 12.51 crore changing hands on the day.
Saiham Cotton, Sonar Bangla Insurance, Daffodil Computers, Dutch-Bangla Bank, New Line Clothings, Khulna Power Company, LafargeHolcim Bangladesh and British American Tobacco Company were the other turnover leaders.
Miracle Industries gained the most on the day with a 7.8-per cent increase in its share prices while Sonar Bangla Insurance performed the worst, losing 8.72 per cent.
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