Stocks dip as dismal corporate earnings erode investors’ confidence

Dhaka stocks witnessed a steep fall this week as dismal corporate earnings from a large number of companies for the second consecutive quarter prompted investors to offload their holdings to save their funds from the ailing market.

Besides, rumors regarding the floor price withdrawal further weakened investors’ confidence as most of the stocks were stuck at their floor prices for a long time at the country’s premier bourse— Dhaka Stock Exchange (DSE).

Moreover, the central bank’s recent decision to uplift the interest rate cap on consumer loans along with the depleting foreign exchange reserves and the worsening trade gap between exports and imports also intensified investors’ concerns about the return of their funds from the market.

The market, however, started to recover in the last two trading sessions of the week as investors reacted positively to the securities regulator’s attempt to withdraw the floor price for block transactions, increasing liquidation opportunities for large investors, said EBL Securities, a stockbroker, in its weekly market review.

The DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), plunged 87.77 points or 1.38 per cent to settle the week at 6,266 points.

Among other major indices, the DS30, the blue-chip index, dropped 36 points or 1.61 per cent to 2,199, and the DSES, the Shariah-based index, fell 20.85 points or 1.51 per cent to close at 1,364 points.

Turnover, another crucial market indicator, averaged out at Tk 604 crore at the premier bourse this week.

This average turnover was 48.1 per cent lower than the previous week’s figure of Tk 1165 crore as investors’ participation was very low on the DSE’s trading floor because they preferred to remain sidelines in bid to shun their fund losses.

The market performed five sessions this week. It witnessed a massive fall of 0.77 per cent on Sunday, the first trading session of the week.

The free fall also continued in the next two sessions with 0.81 per cent plunge on Monday and 0.56 per cent fall on Tuesday.

The market, however, turned positive on Wednesday with a gain of 0.56 per cent and continued the upbeat momentum by gaining 0.2 per cent on Thursday.

Financial sectors posted mixed performance this week. Of them, life insurance booked the highest gain of 1.76 per cent, followed by general insurance (0.15 per cent), and mutual fund.

On the other hand, the bank sector suffered the most with a plunge of 0.28 per cent, followed by NBFI (0.08 per cent).

The non-financial sectors posted mixed performance in the week with the food & allied sector booking the highest gain of 0.04 per cent, followed by the telecommunication.

Whereas, the pharmaceuticals sector experienced the maximum loss of 2.93 per cent, followed by fuel & power (0.37 per cent), and engineering (0.37 per cent).

Investors were primarily active in the IT stocks, followed in pharmaceutical & chemicals and in the miscellaneous sector.